SHANGHAI, Jul 12 (SMM) – Most SHFE base metals rallied on Thursday July 12 as the market shook off some trade concerns from last night after fresh threats of tariffs from the US.
Nickel led the increases with a gain of 3.6%. Copper climbed up 1.3%. Aluminium and tin rose close to 1%. Zinc rebounded from lows and closed slightly higher. Lead dipped 0.4% from resistance.
The ferrous complex rose across the board. Rebar jumped 2.7%, coke surged 2.5%, hot-rolled and iron ore went up 2.1% and coke gained 1.9%.
Copper: The SHFE 1809 contract climbed up to the 49,000 yuan/mt level during the day, buoyed by its rebounding LME counterpart. Pressure lingered at the five-day moving average as longs remained cautious. The US dollar index hovered around the high level of 94.7 with upbeat data of producer prices in June. We expect the contract to continue to trade rangebound around the 49,000 yuan/mt level tonight. The market can take some cues from US consumer prices for Juthat will be released tonight.
Aluminium: The SHFE 1809 contract stood above the five- and 10-day moving averages during the day with a slightly higher trading level. The contract is expected to remain rangebound in the short term with a trading range at 13,950-14,250 yuan/mt, as alumina prices are likely to rebound and as demand weakens.
Zinc: Lifted by its LME counterpart, the SHFE 1809 contract initially surged in the afternoon and broke the 21,000 yuan/mt level to a high of 21,095 yuan/mt before it dipped. Its MACD green line shortened. We expect it to try to stand firmly above the 21,000 yuan/mt level tonight given slightly resilient market sentiment.
Nickel: The SHFE 1809 contract surged during the day with its KDJ lines diverging and expanding upwards, and its MACD green line shortening. Strong fundamentals supported nickel prices. The Chinese government’s intensive environmental initiatives continued to limit the production of nickel pig iron (NPI) while production of stainless steel recovered as costs decreased. The SHFE nickel index saw an inflow of some 560 million yuan of funds today, topping the nonferrous complex. We expect the contract to consolidate around the 112,000 yuan/mt level tonight. Market participants can take some cues from the US consumer prices in June and initial unemployment claims last week.
Lead: With strong bearish sentiment, the SHFE 1808 contract fell to the daily moving average after it hit a high of 19,170 yuan/mt during the day. Its open interest continued to shrink with shorts covering their positions. We see the contract remaining on a downward track. It is likely to test the 19,000 yuan/mt level tonight.
Tin: The SHFE 1809 contract extended its overnight gains during the day and managed to stand above the five- and 10-day moving averages. We see limited upward room for the contract given the low season in the domestic market. Resistance is seen at the 145,000 yuan/mt level.