SMM Evening Comments (Sep 14)

SHANGHAI, Sep 14 (SMM) – SHFE nonferrous metals, except for tin, ended in positive territory on the final trading day of the week. Lead rose 0.9%, nickel increased 0.5%, aluminium gained 0.38% with copper up 0.37% and zinc up 0.36%.

The ferrous complex also performed well. Coking coal climbed 1.3%, rebar rose 0.91%, iron ore gained 0.6% and coke inched up 0.53%. Hot-rolled coil slid 0.2%.

Copper: As longs covered their positions, the SHFE 1811 contract fell to settle at 48,420 yuan/mt, near its intraday low, after it climbed to a high of 48,680 yuan/mt. A total of 258 million yuan flowed out of the SHFE copper contracts today, suggesting that risk-averse sentiment grew enthusiasm across longs to liquidate their positions. Open interests for September-December contracts shrank close to 17,000 lots, compared to a 12,756-lot decline in open interest for all SHFE copper contracts. Technically, the 1811 contract broke the middle Bollinger band to stand above 48,000 yuan/mt and touched the 40-day moving average. 

Aluminium: The SHFE 1811 contract came off from an intraday high of 14,640 yuan/mt to settle at 14,585 yuan/mt. The contract closed higher than open prices for the first time in 13 consecutive trading days. We expect it to continue its growth to test the five-day moving average tonight. Market participants tonight should monitor the movement of LME lead, developments in US sanctions on Rusal and China’s winter output curbs.

Zinc: As short built and longs covered their positions, the SHFE 1811 contract tumbled past the 20- and 10-day moving averages to a low of 20,590 yuan/mt in the afternoon. It halted the decline with support at the middle Bollinger band and recovered most of those losses to end at 20,735 yuan/mt. Its KDJ lines continued to expand upwards, indicating a persisting rising track. We expect the contract to test pressure at the 60-day moving average tonight. LME zinc performed poorly during the European trading hours, and market participants should remain cautious.

Nickel: The SHFE 1811 contract dropped to 103,510 yuan/mt and closed at 103,820 yuan/mt after it rose to a high of 104,220 yuan/mt. Its KDJ lines expanded upwards while the MACD green line shortened. We expect the contract to hover around 103,800 yuan/mt tonight.

Lead: Bullish investors lifted the SHFE 1810 contract past several moving averages to end at 19,020 yuan/mt. The contract hit an intraday high at 19,055 yuan/mt. It traded between the middle and upper Bollinger bands this week and is expected to extend its gains tonight.

Tin: The SHFE 1901 contract initially plunged to an intraday low 143,530 yuan/mt before it hovered around 144,000 yuan/mt and closed at 143,920 yuan/mt. Shorts and longs diverged today with open interest for the contact up 2,108 lots to 35,032 lots. We expect the contract to remain under pressure in the short term with support at 142,500 yuan/mt.