SMM Evening Comments (Jun 11)

SHANGHAI, Jun 11 (SMM) – Nonferrous metals saw mixed trading on Monday June 11. SHFE nickel led losses and closed 0.79% lower. Tin dipped 0.52%, and aluminium inched down. Zinc, lead, and copper went up slightly.

The ferrous complex gained for the most part. Iron ore rose 0.64%. Rebar and hot-rolled coil inched up, while coking coal lost 0.76% and coke edged down.

Copper: The SHFE 1808 contract declined to a low of 54,000 yuan/mt after it soared last week. It fell below the daily moving average as bullish sentiment eased when it appeared that the Escondida union in Chile is likely to reach a deal. The contract is expected to test support at 54,000 yuan/mt tonight. Investors would look for more cues from China's financial data in May, including social financing and M2 money supply.

Aluminium: The SHFE 1808 contract mostly hovered at 14,875-14,945 yuan/mt during the day and closed at 14,915 yuan/mt with open interests down 664 lots to 699,540 lots. Lacking incentives, it is expected to continue its rangebound trend in the short run.

Zinc: The SHFE 1808 contract moved in line with its LME counterpart with limited support from fundamentals in the domestic market. The contract rebounded from a low of 24,270 yuan/mt and closed at 24,445 yuan/mt, 185 yuan/mt higher from last Friday. It is expected to trade along the upper Bollinger bands tonight with pressure at 24,500 yuan/mt.

Nickel: The SHFE 1809 contract hovered around the 116,120 yuan/mt in the morning after it reached a high of 116,880 yuan/mt. As shorts were no longer squeezed, the contract fell and consolidated around the 115,700 yuan/mt level under the daily moving average. We expect it to trade weakly rangebound tonight.

Lead: Buoyed by longs, the SHFE 1807 contract surged to a high of 20,595 yuan/mt before noon. It inched down to hover at 20,535 yuan/mt in the afternoon as most base metals weakened. We see an upward trend in the contract tonight with pressure at the five-day moving average. Investors would take guidance from the movement of LME lead and US dollar tonight.

Tin: After it dipped to a low of 151,630 yuan/mt in the morning, the SHFE 1809 contract mostly traded rangebound at 152,100 yuan/mt during the day. Trading volume declined 10,920 lots to 26,188 lots. It is likely to hover at current levels with pressure tonight.

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