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SMM: Poor Fundamentals Causing Slump of Lead, Ferrous Capital Continues to Outflow (2017-10-18)

iconOct 18, 2017 17:26
Source:SMM
SHFE Nickel goes up before closure and finishes slight high. SHFE Lead drops over 3%, leading loss of Base Metals.

SHANGHAI, Oct. 18 (SMM)-Today’s ferrous market is mixed with a volatile tendency and prudent emotion. Up to daytime closure, the results are mixed. Iron ore gains a slight rise, coking coal slightly drops, hot rolled coil drops over 1% and coke drops over 3%. SHFE Base Metals open low without exception. Afternoon see a enlarging amount of drop for some commodities. Only SHFE Nickel goes up before closure and finishes slight high. SHFE Lead drops over 3%, leading loss of Base Metals.

Concerning weak tendency of lead today, Wang Lan, SMM senior lead analyst says, the fundamentals is relatively bearish. With much stocks in the market, upstream and downstream are reluctant to receive them. So transaction is hard to reach, which lead to one week’s stable price of average discounts of 1# lead, which offers at 1,300 yuan with the highest level during past few years. Besides, with opening of the 19th CPC National Congress, hedging emotions also lead to bulls’ reducing their positions. Need to observe prudently about support of 60-day moving average in the short term.

Concerning capital outflow today, ferrous metals see a 959 million yuan leaving. RB Steel outflows 680 million, ranking the first. Hot-rolled coil see a 180 million reduced position. Nonferrous metals see a 250 million capital inflow. SHFE Zinc gets 310 million increasing position.

Copper: During the 19th CPC National Congress, all parties perform prudently and wait for policy orientation. SHFE Copper keeps stable after previous surge. It is estimated to retrace slightly for the short term, testing support of below 5-day moving average. Stay bearish for medium-long term.

Lead: SHFE Lead is adhesive to 5-day and 20-day moving average above. During night it is estimated to test stability of 10-day moving average.

Tin: SHFE Tin broke the 20-day moving average below. It is estimated to continue to test validity of below points. Today see a drop of increasing positions. It is estimated to test support of 145,000 yuan per tonne below. SHFE Tin is expected to move within range of 144,500-146,500 yuan per tonne.

Aluminium: Green policies in many cities involving electrolytic aluminium has implemented. SHFE Aluminium has no more potential good news in the short term, plus poor consumption, the index is dominated by bears with apparent weak fundamentals. During night need to focus on the validity of 60-day moving average. SHFE Aluminium is expected to attempt to drop further.

Nickel: SHFE Nickel is estimated to keep volatile and strong during night session. Need to focus on the US EIA crude oil inventories last week and US newly-built house number in September.

Zinc: This day see a struggle between bears and bulls. SHFE Zinc moves unstably. The bearish emotions at low price have risen, with surge of positions. The retracement amount during the day is sufficient, it is estimated to reorganize around 25,000 yuan per tonne and wait for new opportunity.


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