SMM Evening Comments (Jun 8)

SHANGHAI, Jun 8 (SMM) – Nonferrous metals dipped across the board on Friday June 8 with SHFE nickel leading the loss and closing nearly 2.4% lower. Tin dropped 1.2%, lead fell 0.72%, and copper, zinc, and aluminium inched down. 

The ferrous complex saw mixed trading. Coke rose 0.73%, coking coal gained 0.28%, while iron ore slumped nearly 1.2%. Rebar and hot-rolled coil dipped. 

Copper: The SHFE 1808 contract weakened and diverged from the daily moving average today as investors added their shorts. It dipped to a low of 53,700 yuan/mt, and closed at 53,780 yuan/mt with open interests surging 13,000 lots to 220,000 lots. It is expected to test resistance at 54,000 yuan/mt tonight. Investors will take guidance from prices of LME copper tonight. 

Aluminium: The SHFE 1808 contract touched a low of 14,765 yuan/mt as investors cut their longs on uncertainty over China’s regulation on power plants. The contract closed at 14,835 yuan/mt with open interest down 14,384 lots to 202,336 lots. It is expected to hover at current levels with pressure at 15,000 yuan/mt in the short run. 

Zinc: The SHFE 1808 contract registered a second consecutive day of decline to close at 24,260 yuan/mt, after surging to a high of 24,305 yuan/mt. However, with strong support below, the contract is likely to rebound tonight with buoyance from its LME counterparts. The contract will test pressure at the Bollinger upper bands tonight. 

Nickel: Amid bearish sentiment and as longs declined, the SHFE 1809 contract tumbled 2,990 yuan/mt from Tuesday to close at 114,900 yuan/mt. As the KDJ indicators expanded downwards and the longer-term moving average of the MACD shortened, the contract is expected to trade weakly tonight. 

Lead: The SHFE 1807 contract initially fell and broke the five-day moving average to a low of 20,310 yuan/mt during the day as some longs cashed in and left. It then stabilised and hovered around the 20,375 yuan/mt level. The contract saw its open interest sharply down for three consecutive days, suggesting a large outflow of speculative funds. We see the contract retaining its upward trend and expect it to consolidate around the five-day moving average tonight.

Tin: The SHFE 1809 contract extended its weak performance today and slumped to a low of 152,000 yuan/mt as longs declined in an oversupplied market. The contract is likely to weaken further in the short term with support at 150,000 yuan/mt.

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