SMM Evening Comments (Sep 17)

SHANGHAI, Sep 17 (SMM) – SHFE nonferrous metals ended mostly negative on Monday with new threats of US trade tariffs on Chinese goods. Nickel plunged 1.7%, zinc dropped 1.5%, copper fell 1.4%, lead slid 1.3%, aluminium lost close to 1% while tin gained 0.24%.

The ferrous metals saw mixed performance. Coke rose 1.2%, rebar increased 0.61%, coking coal inched up 0.12% while iron ore slipped 0.4% and hot-rolled coil dropped 0.73%.

Copper: The SHFE 1811 contract opened lower and dropped to an intraday low of 47,840 yuan/mt. It rebounded to 48,100 yuan/mt before it closed at 47,930 yuan/mt. The SHFE 1809 contract finished its last trading day with a settlement price of 48,380 yuan/mt and delivery volume of 21,375 mt. As shorts built up, 105 million yuan entered the SHFE copper complex today, topping nonferrous metals. We expect the 1811 contract to try to hold its ground at the 10-day moving average tonight.

Aluminium: The SHFE 1811 contract hovered around 14,470 yuan/mt before it fell to 14,430 yuan/mt, a new low in close to three weeks. The contract ended lower than open prices and its KDJ lines expanded downwards. The 1809 contract finished its last trading day down 0.72% at 14,400 yuan/mt. We expect the 1811 contract to continue its weak and rangebound pattern tonight.

Zinc: As shorts added their positions and longs covered their positions, the SHFE 1811 contract tumbled to an intraday low of 20,330 yuan/mt before it climbed to meet resistance from the middle Bollinger band. It settled at 20,440 yuan/mt. The contract closed lower than its opening price and its KDJ lines expanded downwards. While this suggested a bearish outlook, low stocks of zinc across Shanghai, Tianjin and Guangdong might provide some support to SHFE zinc prices. We expect the contract to consolidate tonight. The SHFE 1809 contract finished its last trading day with settlement price at 21,440 yuan/mt and delivery volume of 5,675 mt.

Nickel: With buildup of short bets, the SHFE 1811 contract fell to 101,670 yuan/mt before it recovered some losses to close at 102,090 yuan/mt. Its KDJ lines expanded downwards while MACD green line shortened. The SHFE 1809 contract finished its last trading day 1.9% lower at 101,900 yuan/mt. We expect the November contract to hover around 102,000 yuan/mt tonight.

Lead: The SHFE 1810 contract tumbled to the 18,600 yuan/mt level before it rebounded to end at 18,665 yuan/mt. While the contract closed lower than its opening price, and as its five- and 10-day moving averages expanded downwards, it retained its rangebound pattern and is likely to continue this pattern tonight. The 1809 contract expired today with a settlement price of 18,895 yuan/mt and delivery volume of 6,800 mt.

Tin: As shorts covered their positions, they pushed the SHFE 1901 contract up to the 144,700 yuan/mt level in the morning. As longs cut their positions, the contract slid in the afternoon and closed at 144,360 yuan/mt. Tin remained under pressure even if it was the only SHFE base metal to close in positive territory today. We see limited upward momentum in the contract with resistance seen at 145,500 yuan/mt.