SMM Evening Comments (Jun 19)

SHANGHAI, Jun 19 (SMM) – Nonferrous metals futures dipped across the board on Tuesday June 19 with SHFE copper leading losses and closing over 3.4% lower. Aluminium slumped over 2.8%, zinc fell nearly 2.4%, tin lost almost 2%, and nickel went down nearly 1.8%. Lead inched down.

The ferrousc complex also plunged. Iron ore dived 4.6%, coke and coking coal lost some 4%, and rebar and hot-rolled coil closed 2.9% lower.

Copper: The SHFE 1808contract lost support from the 20-, 40-, and 60-day moving averages to a low of 51,590 yuan/mt in the wake of US president Donald Trump's threat of a new tariff of 10% on $200 billion worth of imports from China. Open interests dipped 18,860 lots to 191,000 lots during the day, with capital outflow amounting to 1.8 billion yuan across all copper contracts. Support is expected at 51,500 yuan/mt in the short term. Investors will take more cues tonight from US housing starts data in May.

Aluminium: As longs cut their positions, the SHFE 1808 contract slumped twice to a low of 14,070 yuan/mt in the afternoon. Despite a continuous decline in social inventory over the weekend, investors cut their long positions as alumina prices fell and as the specter of a US-China trade war lingered. On Monday, the US slapped over 167% in anti-dumping duties on China’s aluminium alloy sheets. As LME aluminium also dipped during the European trading session, the SHFE contract is likely to face continued pressure and test support at 14,000 yuan/mt tonight.

Zinc: The SHFE 1808 contract fell below all the moving averages during the day with pressure from growing inventories in the low season. The contract closed at 23,545 yuan/mt after it fell to a low of 23,450 yuan/mt. It lacks upward momentum in the short term and may test support at the Bollinger lower bands tonight. 

Nickel: The SHFE 1809 contract hovered around the daily moving average in the morning. However, it dropped in the afternoon to a low of 112,420 yuan/mt as investors covered their longs amid bearish sentiment over US-China trade friction and sluggish demand for stainless steel demand. The contract received support at the 60-day moving average. As the KDJ indicators expanded downwards and MACD green line lengthened, the contract is likely to trade weakly tonight.

Lead: After it fell to a low of 19,950 yuan/mt, the SHFE 1807 contract received some support. Lead saw the smallest decline as SHFE base metals plunged today and it is likely to rebound tonight. Support will be seen at 19,900 yuan/mt in the short term. 

Tin: The SHFE 1809 contract dived after opening as investors reduced their long positions. It closed at 144,840 yuan/mt after it fell to a low of 144,800 yuan/mt in the afternoon. We see it weakening further in the short term with support at 142,500 yuan/mt.