SHANGHAI, Jul 3 (SMM) – The nonferrous complex closed with mixed performances on Tuesday July 3. SHFE lead dropped 0.84%, nickel and aluminium dipped while zinc and tin nudged up and copper gained 0.18%.
The ferrous complex fell across the board. Coke led the decreases with a loss of 1%. Coking coal edged down close to 1%, rebar lost 0.64% and hot-rolled coil and iron ore dipped.
Copper: The SHFE 1808 contract hovered around the 51,300 yuan/mt level within a range of 100 yuan/mt in the morning. As the US dollar came off from highs, LME copper surged. Market sentiment received a boost as the Chinese stock market rebounded from earlier losses. The contract initially jumped to a high of 51,560 yuan/mt in the afternoon as shorts left the market. It then consolidated around the 51,520 yuan/mt level. Before closing, it lost some gains as shorts entered the market and as speculative longs left. Open interest in the 1809 contract rose sharply. We expect the 1808 contract to test the support at the 51,500 yuan/mt level tonight.
Aluminium: The SHFE 1808 contract initially tumbled to a low of 13,905 yuan/mt as shorts dominated. As market sentiment recovered, the Chinese stock market rebounded and the commodity market regained some losses. As shorts closed out their positions, the contract pared some losses to stand at the 14,025 yuan/mt level. We see limited speculative room for aluminium prices in the short term and the contract is likely to remain rangebound.
Zinc: The SHFE 1808 contract surged above the daily moving average and traded robustly in the afternoon to a high of 23,250 yuan/mt as shorts exited. This followed after it fell to a low of 22,965 yuan/mt and received support at 23,000 yuan/mt in the morning. The contract closed at 23,200 yuan/mt, up 140 yuan/mt from Monday, with open interests down 1,802 lots to 167,000 lots. It is expected to extend its robust performance tonight with resistance at 23,300 yuan/mt.
Nickel: As longs added their positions and as shorts cut their positions, the SHFE 1809 contract climbed to a high of 116,270 yuan/mt in the afternoon after it hovered around the daily moving average in the morning. With pressure at the 116,300 yuan/mt level, the contract hovered around the 116,080 yuan/mt level to the close of the trading session. The contract is likely to hit the 117,000 yuan/mt level tonight. The market will take cues from the US data for durable goods orders and factory orders in May that will be released tonight.
Lead: The SHFE 1808 contract fell during the day, as trading volumes shrank for three consecutive trading days. The price spread between the 1808 and 1807 contracts widened to 1,100 yuan/mt. A slight correction is seen for the 1808 contract in the short term as its Bollinger bands expand in the same direction and with a bearish MACD crossover. The contract is likely to test the support at the 20-day moving average tonight.
Tin: Trading levels of the SHFE 1809 contract picked up today, and the contract traded strongly rangebond. It is likely to continue this trading pattern in the short term with resistance at the 146,000 yuan/mt level.