SMM Evening Comments (Jul 31)

SHANGHAI, Jul 31 (SMM) – Nonferrous metals inched up for the most part on Tuesday July 31 as SHFE aluminium led the gains and closed 0.87% higher. Zinc rose 0.52%, nickel rebounded 0.47%, and tin grew 0.37%. Copper fell 0.22% and lead lost 0.35%. 

The ferrous complex, except for iron ore, rose across the board. Rebar gained over 1%. Hot-rolled coil, coke, and coking coal increased nearly 0.7%.

Copper: The SHFE 1809 contract hovered in a narrow range above the daily moving average, and broke pressure at 50,000 yuan/mt at one point. However, it lacked strong upward momentum as market concerns intensified on poorer-than-expected Chinese official manufacturing purchasing managers' index (PMI) for July. The contract is expected to test resistance again at the 50,000 yuan/mt level tonight. Investors would take more guidance tonight from the eurozone gross domestic product (GDP) growth in the second quarter, the US personal consumption expenditures (PCE) price index and its personal spending in June. 

Aluminium: As longs grew and provided support, the SHFE 1809 contract stood firm above the five-day moving average. It gained 125 yuan/mt from Monday to close at 14,540 yuan/mt, with open interests up 2,192 lots to 266,008 lots. We see it rising further tonight and testing pressure at the 60-day moving average above. 

Zinc: The SHFE 1809 contract inched down below the daily moving average after opening, but climbed up to a high of 21,510 yuan/mt in the afternoon as investors added their long positions and cut shorts. It closed at 21,405 yuan/mt, up 465 yuan/mt from Monday. There was significant pressure at the Bollinger middle band and the contract is expected to trade with continued resistance at that level tonight. 

Nickel: Rising longs pulled up the SHFE 1809 contract to break pressure at 113,200 yuan/mt to a high of 113,390 yuan/mt. With limited support, the contract dipped to hover at 112,930 yuan/mt, with pressure at the 40-day moving average. As its KDJ indicators expanded upwards and the longer-term moving average of the MACD lengthened, it is likely to consolidate at highs around 112,800 yuan/mt tonight. 

Lead: As China’s official manufacturing PMI this month came in lower than expected, the SHFE 1809 contract dipped to a low of 18,410 yuan/mt in the morning. It rebounded and hovered at 18,465 yuan/mt in the afternoon as most base metals strengthened. However, with pressure at the 10-day moving average above, it is likely to remain its weak trend tonight. 

Tin: The SHFE 1809 contract hovered at 147,800-148,100 yuan/mt during the day. It closed at 148,100 yuan/mt, with open interests down 164 lots to 24,662 lots. Resistance is seen at 150,000 yuan/mt and support will be seen at 146,500 yuan/mt tonight.