SMM Evening Comments (Aug 29)

SHANGHAI, Aug 29 (SMM) – SHFE nonferrous metals closed mixed on Wednesday. Nickel rose 0.94%, aluminium gained 0.61% and copper increased 0.41% while tin dipped 0.16%, lead lost 0.38% and zinc fell 0.85%.

The ferrous complex, except for coke, dropped across the board. Iron ore sank 0.41%, hot-rolled coil slid 1.25%, rebar slipped 1.47% and coking coal lost 1.62%.

Copper: The SHFE 1810 contract fell to an intraday low of 48,750 yuan/mt and closed the trading day 0.41% higher at 48,830 yuan/mt after it climbed to a high of 49,100 yuan/mt. It is likely to try again to break through 49,000 yuan/mt tonight. Tonight, market participants can take some cues from  the US' second quarter gross domestic product (GDP) growth, weekly mortgage applications and crude oil inventory data.

Aluminium: The SHFE 1810 contract reversed some overnight gains and closed the trading day 0.61% higher at 14,875 yuan/mt following shipment delays and production cuts on maintenance at alumina refineries in Western Australia. SHFE aluminium prices also fell as the US dollar strengthened. Cost support is likely to continue in the short term, and SMM expects the contract to continue its strong and rangebound pattern in the long term.

Zinc: With limited upward momentum, the SHFE 1810 contract failed to return above the daily moving average in the morning, when it slumped sharply after opening. It extended its decline in the afternoon and fell to an intraday low of 21,010 yuan/mt. As the Bollinger middle band, 20- and 40-day moving averages provided strong support, the contract is likely to stop its decline tonight.

Nickel: The SHFE 1811 contract settled at 109,890 yuan/mt after it jumped above the 20-day moving average to an intraday high of 111,260 yuan/mt. The contract rose 0.94% from the previous day. Some 220 million yuan flowed out of the SHFE nickel complex, the largest volume across SHFE nonferrous metals. Its KDJ lines converged and expanded upwards while its MACD green line shortened. We expect the contract to hover around 110,000 yuan/mt tonight. 

Lead: The SHFE 1810 contract traded rangebound and ended the day down by 0.38% at 18,280 yuan/mt. Open interests for the contract shrank 2,694 lots to 58,954 lots. We expect it to test support at the five-day moving average tonight.

Tin: The SHFE 1901 contract rebounded to a high of 146,090 yuan/mt and settled at 145,950 yuan/mt after early declines. The contract lost 0.16% from the previous day. We expect it to remain rangebound in the short term.