SMM Evening Comments (Jun 20)

SHANGHAI, Jun 20 (SMM) – SHFE nonferrous metals ended mixed on Thursday June 20 as zinc fell 1%, lead lost 0.83%, tin eased 0.13%, while aluminium grew 0.4%, nickel climbed 0.5%, and copper nudged up. 

The ferrous complex extended increases as iron ore continued to expand close to 4%, hot-rolled coil jumped over 2%, rebar gained 1.67%, coke rose 0.39%, and coking coal advanced 0.7%. 

Copper: The most-active SHFE August contract rebounded from a low of 46,790 yuan/mt as the greenback weakened on signs of interest rate cuts by the US Federal Reserve this year. The contract jumped to an intraday high of 46,990 yuan/mt and finished the trading day 0.21% higher at 46,930 yuan/mt. Open interests gained 936 lots to 245,000 lots as long added their positions. Technical support will remain tonight as the KDJ indicators expanded upwards and the MACD red line lengthened. But uncertainties around macroeconomic development ahead of the G20 summit next week will keep investors cautious. Tonight, the contract may manage to stand firm above the 47,000 yuan/mt level. 

Aluminium: The most-liquid SHFE August contract registered the third consecutive trading day of increase as it regained losses from the morning session after upbeat market sentiment buoyed prices. It returned above the five-day moving average, to an intraday high of 13,910 yuan/mt, and closed at that level, up 0.4% on the day. The KDJ indicators expanded upwards and the MACD green line shortened. Fundamentals are expected to cap its upside room tonight. 

Zinc: Shorts loaded up their positions and dragged the most-active SHFE August contract to an intraday low of 19,665 yuan/mt, as falling prices below the 20,000 yuan/mt level overnight grew worries in the market. The contract rebounded with limited momentum, ending 1% lower on the day at 19,865 yuan/mt. Tonight, it is expected to test support from the Bollinger lower band. 

Nickel: With support from several moving averages and the 99,500 yuan/mt level below, the most-traded SHFE August contract climbed to a high of 100,290 yuan/mt and gained 0.5% on the day to close at 99,880 yuan/mt. It stood firm above the five-day moving average today. We expect it to continue to test support from the five-day moving average tonight. 

Lead: The most-active SHFE lead contract moved to the August contract, which dipped to lows around 16,060 yuan/mt as aggressively expanded shorts depressed upward momentum in prices. It hovered around 16,090 yuan/mt and fell 0.83% on the day to end at 16,095 yuan/mt. Open interests climbed 3,748 lots to 39,264 lots. Pressure from the 16,300 yuan/mt level is expected to keep the contract at 16,000 yuan/mt tonight. 

Tin: The most-liquid SHFE September contract trended upwards as departing shorts lifted prices. However, it failed to end higher on the day as it closed 0.13% lower at 144,100 yuan/mt. Pressure was seen from the five- and 20- day moving averages. Tonight, it is likely to find support at 143,500 yuan/mt, with resistance lingering at the five- and 20- day moving averages, or the 144,400 yuan/mt level.