SMM Evening Comments (Jun 4)

Published: Jun 4, 2018 18:22

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SMM Evening Comments

SHANGHAI, Jun 4 (SMM) – Most nonferrous metals weakened on Monday June 4 except for SHFE copper and aluminium. SHFE tin fell 2%, zinc closed 0.62% lower, and lead and nickel inched down.

The ferrous complex dipped across the board as coke led the loss with a drop of nearly 3.5%. Iron ore, coking coal, and hot-rolled coil fell over 1%, and rebar edged down.

Copper: SHFE 1807 contract opened at high but declined all the way below the daily moving average to a low of 51,690 yuan/mt today. It closed at 51,760 yuan/mt, up 420 yuan/mt from last Friday. Support was seen at the 10-day moving average. We expect it to test support at 51,600 yuan/mt tonight. The dominant contract is likely to move to 1808 in the near term as its open interests surged 8,286 lots to 165,000 lots today.

Aluminium: As investors covered their longs, the SHFE 1807 contract was depressed to 14,650 yuan/mt after it rose to a high of 14,710 yuan/mt. Prices of aluminium will face pressure in the mid term as orders across downstream processing plants declined month on month in June and alumina prices fell from highs in the overseas market. The contract is expected to consolidate at current levels tonight.

Zinc: Thr SHFE 1807 contract traded weakly today. It broke support at the five- and 60- day moving averages to a low of 24,030 yuan/mt as investors covered their longs. With pressure from sluggish downstream demand, it is likely to struggle below the 60-day moving average tonight, and to try to stand above 24,000 yuan/mt.

Nickel: The SHFE 1807 contract received support at the five-day moving average after it dipped to a low of 116,110 yuan/mt as investors cut their long positions. It inched down from last Friday to close at 116,830 yuan/mt today. We see it hovering at current levels with downward room tonight. Investors will take more cues from the US durable goods order and factory orders in April.

Lead: Buoyed by rising long positions, the SHFE 1807 contract surged to a high of 20,015 yuan/mt but faced resistance from shorts. It closed above the 10-day moving average today at 19,885 yuan/mt with as bearish sentiment eased in the market. We see it continuing the rangebound pattern in the short term and testing support at the 10-day moving average tonight.

Tin: The SHFE 1809 contract slumped to a low of 151,450 yuan/mt and closed 2% lower from the last trading day at 151,780 yuan/mt as investors cut their long positions. As Wa state in Myanmar sold tin ore at lower prices in recent days to celebrate its 30th anniversary, prices of tin are likely to dip further in the short term. We see the contract testing support at 150,000 yuan/mt tonight.

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Evening comments Futures movement

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