SMM Evening Comments (Sep 9)

SHANGHAI, Sep 9 (SMM) – SHFE nonferrous metals closed mostly lower on Monday, with the biggest loss of 2.1% in tin. Lead and copper shed close to 0.3%, and zinc lost 0.1%, while aluminium and nickel gained about 0.1%.

The ferrous complex rebounded across the board. Hot-rolled coil rose 2.8%, rebar climbed close to 2.3%, coke advanced 2.1%, iron ore increased by 1.8% and coking coal gained 1.1%.

Copper: The most active SHFE 1911 contract fluctuated to finish the trading day 0.25% lower at 47,420 yuan/mt, as traders weighed the prospect of Fed interest cuts against their demand for safe-haven assets. With positive technical indicators, SHFE copper is expected to try to cling to the 47,500 yuan/mt level tonight.

Aluminium: The contract for November delivery became the most traded SHFE aluminium contract, and gained 0.07% on the day to end at 14,385 yuan/mt. Report that Indonesia mulls expediting its ban on bauxite exports drove longs to aggressively load up positions in the afternoon. This bolstered the 1910 contract a one-year high of 14,680 yuan/mt, before the contract soon gave back those gains as shorts added their positions and longs took profits. The SHFE 1910 contract inched up 0.21% to end the day at 14,420 yuan/mt. SMM data showed that social inventories of primary aluminium ingots in China extended their declines over the weekend, losing 14,000 mt from Thursday. SHFE aluminium is expected to remain robust in the short term.

Zinc: Short-covering helped the most active SHFE 1911 contract recover from earlier losses to end the day just 0.13% lower at 19,100 yuan/mt. Support from the 40-day moving average limited the downside in zinc prices. The discount of 1909 contract against 1910 contract narrowed from 30 yuan/mt to 5 yuan/mt. SHFE zinc is expected to trade under pressure from the upper Bollinger band tonight.

Nickel: The most traded SHFE 1911 contract extended losses from morning trade to an intraday low of 138,140 yuan/mt in the afternoon, before it recovered from those losses to close the day 0.12% higher at 141,470 yuan/mt. Pressure from the five- day moving average, as high as 143,000 yuan/mt, will come under scrutiny tonight.

Lead: As longs took profits, the most active SHFE 1910 contract dropped to an intraday low of 17,355 yuan/mt in early morning trade, before it rallied somewhat and hovered around 17,420 yuan/mt in a range of 80 yuan/mt in the rest of trading hours, ending the day 0.29% lower at 17,400 yuan/mt. Wider discounts for secondary lead against primary materials dented morale among longs. SHFE lead is unlikely to rise from current highs, unless authorities impose restrictions on production in the run-up to the National Day holiday.

Tin: The most traded SHFE 2001 contract dropped to intraday lows of 138,210 yuan/mt in early morning trade. It later hovered in a tight range, before it claw backed some losses to close the day 2.07% lower at 139,280 yuan/mt. Support is seen at the 60-day moving average, as low as 136,500 yuan/mt.