SMM Evening Comments (Jun 13)

SHANGHAI, Jun 13 (SMM) – Nonferrous metals fell across the board on Wednesday June 13 as SHFE tin led losses with a decline of over 3%. Aluminium closed over 1.5% lower, copper lost nearly 1%, zinc fell 0.7%, and nickel inched down. 

The ferrous complex, except for coking coal, rose across the board. Coke closed nearly 1.6% higher, and rebar gained nearly 1%. Hot-rolled coil and iron ore went up slightly. 

Copper: With pressure at the five-day moving average, the SHFE 1808 contract's trading range moved down on Wednesday. It dipped to a low of 53,430 yuan/mt as investors cut their longs. We see the contract lacking momentum in the short term as the US-North Korea summit progressed positively and as the US dollar is likely to strengthen on a potential hike in interest rates by the Fed on June 14. Investors would look for more cues from the US producer price index (PPI) in May.

Aluminium: With pressure from shorts, the SHFE 1808 contract dropped to a low of 14,570 yuan/mt to test support at the 60-day moving average in the morning. It recovered some of its losses in the morning to close at 14,670 yuan/mt, down 230 yuan/mt from Tuesday. We see it dipping further in the short run on weak fundamentals and declining prices of alumina.  

Zinc: Dominated by short positions, the SHFE 1808 contract traded weakly during the day and fell to a low of 24,160 yuan/mt. It diverged gradually from the Bollinger upper bands during the day and closed at 24,270 yuan/mt, some 280 yuan/mt lower from Tuesday. It is likely to trade around the 10-day moving average tonight. Strong support is seen at 24,000 yuan/mt. 

Nickel: SHFE 1809 contract hovered at the daily moving average after dipping to a low of 114,250 yuan/mt near opening as the US dollar gained. Open interests reduced 13,000 lots to 370,000 lots, with a capital outflow of 129 million yuan during the day. The contract is expected to retain its rangebound pattern tonight. Investors would take guidance from the US PPI in May and the weekly oil inventory data from the Energy Information Administration (EIA). 

Lead: As most base metals weakened, the SHFE 1807 contract inched down to close at 20,505 yuan/mt. Open interests declined for six consecutive trading days by 1,866 lots to 73,848 lots. It is expected to hover between the five- and 10-day moving averages tonight. 

Tin: The SHFE 1809 contract plunged after opening to a low of 147,220 yuan/mt as investors cut their long positions. It fell below the 60-day moving average and nearly lost all accumulated gains since May 28. We expect further downward room in the short term. Support will be seen at 146,000 yuan/mt. 

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