SMM Evening Comments (Oct 17)

SHANGHAI, Oct 17 (SMM) – SHFE nonferrous metals ended mixed on Thursday October 17. Lead was the best performer with a rise of 1.12%. Aluminium added 0.25%, tin continued to climb 0.98%, while zinc lost 1.29%, copper shed 0.49%, and nickel slumped 2.97%. 

The ferrous composite mostly fell as iron ore slipped 2.23%, hot-rolled coil eased 0.06%, stainless steel lost 2.06%, coke dipped 0.31%, while rebar rebounded 0.03%. 

Copper: Dimmed outlook for global economic growth and uncertainties around Brexit kept copper prices at lows, as the most-liquid SHFE December contract stayed rangebound around 46,650 yuan/mt before it dipped to a low of 46,580 yuan/mt and finished the session 0.49% lower at 46,650 yuan/mt. Without any support below from moving averages, the contract may track its LME counterpart and test the 46,500 yuan/mt level tonight. 

Aluminium: The most-active SHFE December contract continued its rally that began on Tuesday, ending higher for the third straight session by 0.25% on the day at 13,835 yuan/mt. Domestic consumption held stable as expected, as evidenced by a weekly draw of 61,000 mt in primary aluminium social inventories, and this boosted the market. SMM retains the view that lower costs and supply recovery, in the long run, may cap the upside room in prices.

Zinc: Expectations of greater nearby supply depressed confidence in longs and weighed the most-traded SHFE December contract below the daily moving average to an intraday low of 18,705 yuan/mt. It finished 1.29% lower on the day at 18,735 yuan/mt, with open interest up 8,230 lots to 205,000 lots amid loaded-up shorts. The KDJ indicators expanded downwards, indicating further downside potential in prices. Tonight, pressure from the Bollinger middle band will be monitored. 

Nickel: The most-traded SHFE December contract fell for the fifth consecutive session by close to 3% today, dragged by addition of bearish positions. It extended overnight decline and moved to the lowest in a month and a half, ending down 2.97% at 128,750 yuan/mt. Resistance from several moving averages above may see the contract testing support from 128,000 yuan/mt tonight. 

Lead: A stronger LME lead encouraged morale in long positions, driving up the most-active SHFE November contract to a high of 17,145 yuan/mt, before the contract trimmed some gains and closed 1.12% higher on the day at 17,095 yuan/mt. Tonight, the rally may halt if the contract fails to test its previous high.

Tin: The most-liquid SHFE January 2020 contract hovered at highs as loaded-up long positions buoyed it to test pressure from the 140,000 yuan/mt level. It pared gains after climbed to an intraday high of 139,640 yuan/mt, closing up 0.98% on the day at 139,620 yuan/mt, extending a rise of 1.34% in the prior session. Resistance above will remain at 140,000 yuan/mt tonight.