SMM Evening Comments (Aug 7)

SHANGHAI, Aug 7 (SMM) –

Copper: As longs grew and the US dollar weakened, the SHFE 1809 contract grew from noon to a high of 49,600 yuan/mt. It closed at 49,480 yuan/mt, up 100 yuan/mt from Monday, with open interests up 1,242 lots to 160,000 lots. The dominant contract is expected to change on August 8 as open interests of the SHFE 1810 and 1811 contracts grew over 10,000 lots. Though copper prices increased, upward momentum is limited given market worries over trade tariffs between the US and its partners. The SHFE 1809 contract is expected to hover above the daily moving average tonight. Investors would take more guidance tonight from China’s foreign exchange reserves for July, and German industrial production data in June. 

Aluminium: The SHFE 1809 hovered around the five-day moving average after it fell to a low of 14,400 yuan/mt after opening. The dominant contract moved to the SHFE 1810, which followed a similar movement from the 1809 contract. With much upward momentum, the 1810 contract inched up from August 6 to close at 14,490 yuan/mt. It is seen testing pressure at the 60-day moving average tonight. 

Zinc: The SHFE 1810 contract failed to stand above the daily moving average, after it climbed to a high of 21,525 yuan/mt. As longs took profits and left, the contract dipped from highs to below the 10-day moving average, and received some support at the Bollinger middle band. It closed at 21,390 yuan/mt, and may consolidate at that level tonight. 

Nickel: The SHFE 1809 contract lost some overnight gains today as longs cut their positions. It then climbed to a high of 112,750 yuan/mt as shorts cut their positions and as longs added their positions. With pressure at the 40-day moving average, the contract then traded weakly rangebound and closed at 112,240 yuan/mt. Technically, its KDJ lines expanded upwards and converged while the MACD line turned red. We expect the contract to hover around 112,000 yuan/mt tonight.

Lead: With support at 18,000 yuan/mt, the SHFE 1809 contract climbed during the day as shorts lingered. It gained 130 yuan/mt from Monday to close at 18,120 yuan/mt, with open interests down 734 lots to 62,136 lots. We expect it to consolidate around the five-day moving average tonight. 

Tin: The SHFE 1809 contract surged to a high of 147,440 yuan/mt as shorts declined. While SHFE base metals gained for the most part, the contract increased 940 yuan/mt from August 6 to close at 146,950 yuan/mt. It is likely it to test resistance at the 60-day moving average tonight.