Ferrous Meeting with Black Thursday, 220 Million Capital Leaving Copper (2017-10-19)

SHANGHAI, Oct. 19 (SMM)－Today see an obvious frustration for ferrous market. After opening low in the morning, ferrous metals basically keep volatile and weak. Up to closure, RB, iron ore and hot-rolled coil drop over 3%, coke drops over 6% and coking coal slumps nearly 7%. SHFE Base Metals mostly open low in the morning. SHFE Aluminium and Nickel moves high during the session. SHFE Lead appears to dive at closure with over 3% loss, leading drop of Base Metals. Other commodities mostly keep volatile and mixed up to closure of day session.

SMM thinks three consecutive days’ drop of SHFE Lead is mainly caused by bearish fundamentals and upstream and downstream’s passive emotion to receive stocks, leading to little transaction and highest level of discounts of 1# lead average price during past few years. With the opening of the 19^th CPC National Congress, hedging emotions also lead to bears’ reducing positions. Need to observe support of 60-day moving average prudently in the short term.

Concerning capital flow, drop of ferrous metals attracts 556 million’s capital inflow. RB get 260 million capital support. SHFE Nickel get 310 million capital inflow, ranking the first among Base Metals. SHFE Copper continues to adjust at 4-year-high point, with 220 million capital’s leaving when opportunity comes.

During night, need to focus on change of number of US’s weekly jobless claims. It is estimated US labor market keeps strong.

Copper: SHFE Copper will keep stable during the 19^th CPC National Congress. It is likely to keep volatile at high points in the short term. In night need to focus on support of 5-day moving average. SHFE Copper also has some downward space for retracement but it is regarded bearish in the mid and long term.

Aluminium: SHFE Aluminum has some upward space in the short term but considering cost of electrolytic aluminium plants and variable inventories, it should not be regarded over bearish.

Nickel: SHFE Nickel is expected to keep violate and weak during night session, probably testing 5-day moving average. Need to focus on the number of US first-time claims for jobless benefits last week.

Tin: SHFE Tin is expected to move weakly within range of 144,500-146,000 yuan per tonne.

Lead: SHFE Lead move within 40-day and 60-day moving average, with probable struggle at 60-day moving average. During night session it is likely to test the stability of the average.

Zinc: SHFE Zinc keeps stable within the day session, with difficulty braking 40-day moving average above. Concern over consumption leads to diverted capital and great outflow. SHFE Zinc is expected to move below 40-day moving average during night session.

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