SMM Evening Comments (Aug 3)

SHANGHAI, Aug 3 (SMM) –

Copper: The SHFE 1809 contract hovered around the daily moving average in the morning. It tumbled to 49,100 yuan/mt in the afternoon as the yuan depreciated and stood at 6.9 per US dollar. China’s lower Caixin purchasing managers' index (PMI) in July also accounted for weaker prices of copper. Workers at the Escondida copper mine in Chile will go on strike unless the company improves their previous offer by August 6. Investors would take more guidance tonight from the European PMIs for July, the US nonfarm payrolls and unemployment data last month. 

Aluminium: The SHFE 1809 contract hit an intraday high of 14,455 yuan/mt before longs’ covering positions dragged it down to a low of 14,355 yuan/mt. As shorts covered their positions, the contract rebounded and closed at 14,390 yuan/mt. We expect it to continue to climb and test the five-day moving average tonight.

Zinc: The SHFE 1809 contract traded rangebound around 21,450 yuan/mt and closed at 21,475 yuan/mt today as shorts and longs diverged. The growth in zinc inventory across Shanghai, Tianjin and Guangdong is likely to weigh on zinc prices while support is seen at the five-and 10-day moving averages. We expect the contract to continue its rangebound pattern tonight. 

Nickel: The SHFE 1809 contract tumbled to 108,610 yuan/mt, its lowest in almost two weeks, before it regained some losses and closed at 108,930 yuan/mt. Technically, its KDJ lines diverged and expanded downwards while the MACD red line shortened. We expect the contract to hover around 109,000 yuan/mt tonight. Market participants can take some cues from July’s US nonfarm payrolls.

Lead: On worries over possible escalated trade tension between China and the US, the SHFE 1809 contract slumped to a low in nearly a year, at 17,855 yuan/mt. Open interests fell 1,780 lots to 65,248 lots during the day. The weak trend is expected to continue tonight. 

Tin: The SHFE 1809 contract started to dip after opening, and lost all the gains accumulated over the week to close at 145,300 yuan/mt. It is likely to trade with continued resistance in the short run, with support at 145,000 yuan/mt.