SMM Evening Comments (Jun 4)

SHANGHAI, Jun 4 (SMM) – SHFE nonferrous metals mostly ended lower on Tuesday June 4 as zinc and nickel lost more than 1%, lead slid 0.87%, aluminium dropped 0.81%, while tin expanded 0.24%, and copper advanced 0.19%. 

The ferrous complex rebounded for the most part as iron ore rose 0.63%, coke jumped 0.57%, rebar grew 0.29%, coking coal went up 0.25%, while hot-rolled coil eased 0.22%. 

Copper: The most-traded SHFE July contract fell to a low of 46,200 yuan/mt as shorts loaded up their positions after the contract jumped to an intraday high of 46,360 yuan/mt right after opening. A lower US dollar index supported the contract in the afternoon, and ended it 0.19% higher on the day at 46,270 yuan/mt. Open interests fell 5,938 lots while that across the August and September contracts accumulated 5,080 lots. Bearish signs from the K-indicator and risk aversion is likely to keep the July contract struggling around 46,300 yuan/mt tonight. 

Aluminium: The most-active SHFE July contract fell to the lowest since May 10 at 14,030 yuan/mt and closed at that level, down 0.81% on the day. Bearish sentiment about macroeconomic development and expectations of a seasonal lull kept the contract at lows around 14,055 today. As the MACD green line lengthened and the KDJ indicators expanded downwards, the contract is expected to test support from 14,000 yuan/mt tonight. 

Zinc: The most-traded SHFE July contract found support from the Bollinger lower band after it slipped to an intraday low of 20,080 yuan/mt, but a lack of confidence in longs only lifted the contract at around 20,230 yuan/mt. It ended 1.22% lower on the day at 20,305 yuan/mt, the third consecutive trading day of decline. Open interests shrank 5,126 lots to 266,000 lots as shorts exited. With limited upward momentum, the contract is expected to test pressure from the five- and 10-day moving averages tonight. 

Nickel: The SHFE August contract became the most active contract as its open interests expanded to 186,000 lots while open interests in the SHFE July contract lost 7,700 lots to 178,000 lots. The July contract consolidated between 96,400-96,700 yuan/mt today with resistance from the 96,700 yuan/mt level. It ended below the Bollinger middle band, at 96,710 yuan/mt, down 1.2% on the day. The SHFE August contract fell 1.21% and closed at 96,490 yuan/mt. We see the August contract testing support from 96,000 yuan/mt tonight. 

Lead: The upward momentum in the most-traded SHFE July contract waned as investors covered their longs and added shorts after the contract rebounded from a low of 15,860 yuan/mt. It finished the trading day 0.87% lower at 15,870 yuan/mt, with open interests down 312 lots to 51,808 lots. Pressure from shorts will see it testing support from 15,800 yuan/mt tonight.

Tin: The most-liquid SHFE September contract hovered within a wide range at lows as it rebounded from an intraday low of 143,010 yuan/mt to a high of 143,830 yuan/mt, before ending 0.24% higher on the day 143,330 yuan/mt. Pressure from 144,500 yuan/mt will cap its growth tonight.