SMM Evening Comments (Oct 24)

SHANGHAI, Oct 24 (SMM) – SHFE nonferrous metals closed mixed on Thursday. Nickel remained the best performer with a 3.4% gain, copper rose 0.7%, and aluminium advanced 0.3%. Lead fell 0.5% and tin shed 0.3%, while zinc stayed flat.

The ferrous complex, except for rebar, drifted higher. Hot-rolled coil led the increases with a 1.1% gain, coke and iron ore climbed 1%, coking coal rose 0.4% and stainless steel advanced 0.3%.

Copper: The most active SHFE 1912 contract eased during the daytime session, after hitting a five-week high of 47,490 yuan/mt overnight on the back of a surprise draw in US crude stocks and amid the unrest at mines. The contract finished the trading day 0.68% higher at 47,360 yuan/mt. SHFE copper failed to solidly hold onto gains, with no signs of improvement in macro events. It will try to remain above 47,300 yuan/mt tonight.

Aluminium: The most traded SHFE 1912 contract ended the trading day 0.29% higher at 13,825 yuan/mt, recovering from an earlier low of 13,800 yuan/mt as downside potential was hampered by falling inventories and firm spot premiums. SHFE aluminium remains under pressure from the 20-, 40- and 60-day moving averages however, and it is expected to remain weak and rangebound in the short term.

Zinc: The most active SHFE 1912 contract held in a tight range around the daily moving average as high as 18,850 yuan/mt during the day, and closed flat at 18,880 yuan/mt. SHFE zinc remained under the middle Bollinger band, but was bolstered by short-covering on low inventories overseas. Over 40 million yuan exited from the 1911 and 1912 contracts on the day, suggesting that investors tended to take a wait-and-see stance. SHFE zinc is expected to remain rangebound in the short run and test resistance at the middle Bollinger band tonight.

Nickel: The most traded SHFE 1912 contract rose to a one-week high of 134,120 yuan/mt during the day, following the news of a temporary closure of Ramu nickel mine in Papua New Guinea. It finished the trading day 3.38% higher at 133,080 yuan/mt, after it gained close to 3% on Wednesday on the back of an accident at major nickel producer Norilsk Nickel’s mine in Siberia.  

Lead: The most active SHFE 1912 contract hovered around the daily moving average in a range of 50 yuan/mt during the daytime session, and closed the trading day 0.54% lower at 16,630 yuan/mt. Weak fundamentals prevented SHFE lead from following its LME counterpart higher, though a strong LME lead might help slow the decline in SHFE lead tonight.  

Tin: The most traded SHFE 2001 contract slipped to an intraday low of 137,360 yuan/mt in early morning trades, before it recovered some ground to end the trading day down 0.31% at 138,110 yuan/mt. Support is seen from the 20-day moving average as low as 137,000 yuan/mt.