SMM Evening Comments (May 9)

SHANGHAI, May 9 (SMM) – SHFE nonferrous metals closed lower across the board on Thursday, with the biggest loss of 1.4% in zinc. Nickel dropped 1.1%, lead fell close to 1%, tin declined 0.8%, copper slid 0.7% and aluminium lost 0.1%.

The ferrous complex, however, traded mixed. Coking coal shed close to 0.9%, hot-rolled coil slipped 0.8% and rebar edged down 0.1% while iron ore inched up close to 0.1% and coke climbed 1.2%.

Copper: The most active SHFE July contract hovered in a range of 120 yuan/mt during the day and failed to recover from overnight losses. It closed the trading day 0.73% lower at 47,560 yuan/mt. A total of 182 million yuan entered the Shanghai copper complex, the most among nonferrous metals. The 1907 contract has lost all technical support, with the lower Bollinger band expanding downwards. LME copper is likely to provide some direction for the Shanghai market tonight, with strength at the 47,400 yuan/mt level.

Aluminium: Short-covering helped the most traded SHFE June contract recover from overnight losses to an intraday high of 14,040 yuan/mt before a lack of confidence prompted longs to cut positions, and the contract retreated to close the trading day 0.11% lower at 14,005 yuan/mt. SMM data showed that social inventories of primary aluminium continued to decline this week, which kept SHFE aluminium least vulnerable to the macroeconomic developments. The contract is expected to trade rangebound between 13,900-14,060 yuan/mt tonight.

Zinc: The most active SHFE July contract fell to a nearly two-month low of 20,765 yuan/mt in early morning trade, as low as the lower Bollinger band, before it rebounded to hover around 20,860 yuan/mt level and ended at 20,840 yuan/mt. The contract did not recover from overnight losses and lost 1.44% on the day. SHFE zinc outperformed its LME counterpart as the offshore Chinese yuan weakened. It remains unclear if SHFE zinc could remain above the lower Bollinger band tonight, amid trade war fears and weak fundamentals.

Nickel: The most liquid SHFE July contract extended overnight losses to a more than three-month low of 94,760 yuan/mt before it closed at 94,900 yuan/mt, down 1.1% on the day. Open interest contract for the contract gained 20,314 lots to 228,888 lots.

Lead: The most active SHFE June contract fell during the day, erasing overnight moderate gains to a nearly two-year low of 16,155 yuan/mt before it ended the trading day 0.98% lower at 16,180 yuan/mt. The unwinding of long positions primarily accounted for the decline today. SHFE lead has moved out of its previous range at 16,300 yuan/mt.

Tin: The most traded SHFE September contract extended overnight losses to finish the trading day 0.81% lower at 146,070 yuan/mt. It saw its declines accelerate in the last trading hour before closing bell, to a four-month low of 145,910 yuan/mt, as shorts loaded up positions. Support is seen at 146,000 yuan/mt with next support at 145,000 yuan/mt.