SMM Evening Comments (Jun 20)

SHANGHAI, Jun 20 (SMM) – Nonferrous metals futures, except for SHFE tin, inched down across the board on Wednesday June 20. 

The ferrous complex mostly gained. Hot-rolled coil went up over 1%. Rebar and coke edged up. Coking coal fell nearly 1%, and iron ore closed slightly lower.  

Copper: The SHFE 1808 contract hovered around the daily moving average within a range of 100 yuan/mt in the morning. The contract climbed above the daily moving average and hovered around the 51,950 yuan/mt level with a narrow range in the afternoon as some longs added their positions. It then moved around the 60-day moving average for most part of the day. Market jitters slightly eased from the previous day. US existing home sales in May released tonight will provide some cues to market participants.

Aluminium: After it climbed to a high of 14,295 yuan/mt in the afternoon as investors added their longs, the SHFE 1808 contract closed at 14,200 yuan/mt. Despite gains today, the contract is likely to face pressure in the short term in the low season and potential growth in spot supplies. Support is expected at 14,000 yuan/mt. 

Zinc: The SHFE 1808 contract mostly traded above the daily moving average at 23,480 yuan/mt. It inched down from Tuesday to close at 23,505 yuan/mt with open interests up 2,916 lots to 212,000 lots. Althoughit dipped less from LME zinc, the contract lacked upward momentum in the low season across downstream consumers. We expect it to consolidate at lows tonight. 

Nickel: As fears abated over a US-China trade war and as domestic inventories continued to fall, the SHFE 1809 contract touched a high of 113,980 yuan/mt. The contract closed at 113,750 yuan/mt, down 30 yuan/mt from Tuesday. Open interests increased 11,000 lots to 340,000 lots. It is likely to hover highs tonight. Investors would take more cues tonight from the US weekly oil inventory data from the Energy Information Administration (EIA).

Lead: Longs initially pulled the SHFE 1807 contract up to a high of 20,075 yuan/mt. The contract then hovered around the 20,040 yuan/mt level in the morning. As bearish sentiment grew, the contract fell and broke the 20,000 yuan/mt level in the afternoon. It hovered within a narrow range after it fell to a low of 19,915 yuan/mt. Technically, the contract now stands at the mid Bollinger band with its upper and lower Bollinger bands converging. The contract is likely to weaken in near term and is expected to hover at 19,900-20,000 yuan/mt tonight.

Tin: The SHFE 1809 contract reversed its downward trend from yesterday and gained 1,180 yuan/mt to close at 146,020 yuan/mt. However, it still traded below the daily moving averages during the day. As the US dollar gains, LME tin weakens and US-Sino trade tension grows, the contract is likely to see downward room in the short term.