SMM Evening Comments (Jul 30)

SHANGHAI, Jul 30 (SMM) – SHFE nonferrous metals closed higher across the board on US-China trade hopes. Nickel gained 2.1%, zinc climbed 1.6%, lead advanced 0.9%, copper rose 0.8%, aluminium grew 0.4%, and tin nudged up.

The ferrous complex traded mixed as iron ore went up 2.3%, coking coal edged up, while rebar lost 0.5%, hot-rolled coil slid 0.9%, and coke eased 1.3%. 

Copper: The most-liquid SHFE September contract pares some gains to  47,130 yuan/mt, ending 0.75% higher on the day at 47,240 yuan/mt, after optimism about US-China trade talks buoyed the contract in morning trading hours. US and Chinese officials met today in Shanghai for a two-day discussion aimed at resolving the year-long dispute between the world’s two biggest economies. The contract closed higher after six consecutive trading days of declines, with the KDJ indicators expanding upwards, indicating strong technical support. It is expected to try to stand above 47,400 yuan/mt tonight. 

Aluminium: The most-active SHFE September contract rallied as longs entered at a low of 13,885 yuan/mt. It rose to around the 60-day moving average and finished at 13,930 yuan/mt, up 0.43% on the day. As an unexpected decline in primary aluminium social inventories continued to sustain longs, the contract may hover at highs between 13,900-14,000 yuan/mt tonight. 

Zinc: Loaded-up longs bolstered the most-active SHFE September contract to break pressure from the 40-day moving average, to a high of 19,785 yuan/mt, before pressure from the 60-day moving average settled it at 19,690 yuan/mt, up 1.63% on the day. Departing shorts also accounted for the increases as limited arrivals of seaborne, domestic materials kept inventories at low. The contract may hover robustly around the 40-day moving average tonight. 

Nickel: As revived US-China trade talks improved market sentiment, nickel stood out as the best performer in base metal complex, as the most-liquid SHFE October contract shrugged off pressure from the five-day moving average to a high of 113,340 yuan/mt, ending 2.06% higher on the day at 112,570 yuan/mt. Open interests grew 19,100 mt to 361,000 lots as long entered. Tonight, the contract may test support from the five-day moving average, or the 112,000 yuan/mt level. 

Lead: The most-traded SHFE September contract regained losses from the previous week as rising longs and exiting shorts drove it to a high of 16,850 yuan/mt, before it gained 0.87% on the day to end at 16,835 yuan/mt. An underperformed LME lead may slow growth in the contract tonight. 

Tin: Longs dominated the most-liquid SHFE September contract, which climbed above the daily moving average to a high of 134,900 yuan/mt, settling 0.01% higher on the day at 134,400 yuan/mt. It is likely to continue to trade rangebound with support from 134,000 yuan/mt and resistance from 136,000 yuan/mt tonight.