SHANGHAI, Jul 18 (SMM) – SHFE nonferrous metals closed mixed on Wednesday July 18 as the US dollar gained on upbeat remarks from the Chairman of the Federal Reserve, Jerome Powell. June’s industrial production and buoyant homebuilding sentiment in the US also buoyed the dollar.
Copper tumbled in the afternoon and closed 1.15% lower. Nickel and aluminium edged down 0.77% and 0.14%, respectively. Lead and tin inched up 0.13% and 0.33%, respectively. Zinc surged before closing and finished the session 2.35% higher.
The ferrous complex rose across the board except for coking coal, which stayed nearly flat. Coke, iron ore and rebar edged up while hot-rolled coil gained by a smaller margin.
Copper: The SHFE 1809 contract hovered around the 48,660 yuan/mt level in the morning and plummeted to a low of 48,130 yuan/mt in the afternoon as shorts flooded into the market. The contract then recovered a few losses before closing. Resistance above grew on concerns over the US-China trade disputes, weak demand in the Chinese market and the strengthening US dollar. SMM will monitor the labour negotiations at BHP’s Escondida copper mine in Chile. We expect the contract to test support above the 48,000 yuan/mt level tonight. Market participants can take some cues from eurozone’s consumer prices and producer prices in June.
Aluminium: With support at the 14,000 yuan/mt and the five-day moving average, the SHFE1809 contract rebounded slightly in the morning after it tumbled to a session-low of 14,010 yuan/mt. As the US dollar extended its gains, the contract slipped in the afternoon and closed below its daily moving average. Its open interest shrank 44 lots to 272,826 lots with trading volumes down 25,450 lots to 114,594 lots. Alumina prices rebounded. There was little progress at the Putin-Trump meeting in Helsinki and there were no further developments in Rusal sanctions. We expect the contract to remain rangebound in the short term with strong support at the 14,000 yuan/mt level.
Zinc: After consolidating around the 20,400 yuan/mt level, the SHFE 1809 contract surged to a high of 20,765 yuan/mt before closing as longs significantly added their positions and as shorts cut their positions. As LME zinc strengthened during the European trading hours, the SHFE contract is likely to climb up tonight.
Nickel: The SHFE nickel 1809 contract tumbled to a low of 108,110 yuan/mt in the afternoon as investors covered their longs. This followed after it climbed to a high of 109,490 yuan/mt, with support at the daily moving average, as longs increased. As the KDJ indicators expanded downwards and the MACD green line lengthened, the contract is likely to trade weakly around 109,000 yuan/mt tonight. Support is seen at 108,000 yuan/mt level below. Investors would take more guidance tonight from the US housing starts in June, as well as its weekly crude oil and gasoline inventories.
Lead: Bolstered by SHFE zinc, the SHFE 1808 contract jumped to a high of 18,860 yuan/mt before closing after it weakened below its daily moving average. Trading volumes shrank for three consecutive days. We expect the contract to hover around the 18,800 yuan/mt level and weaken tonight.
Tin: The SHFE 1809 contract initially hit a high of 144,500 yuan/mt as shorts cut their positions. It then extended its gains to a high of 144,720 yuan/mt. In the afternoon, the contract fell before it rebounded. We expect it to remain rangebound in the short term with resistance at the 146,000 yuan/mt level.