SMM Evening Comments (Aug 15)

Published: Aug 15, 2018 18:19

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SMM Evening Comments

SHANGHAI, Aug 15 (SMM) –

Copper: Shorts sharply lowered the SHFE 1810 contract at noon after it hovered around 48,860 yuan/mt in the morning. With pressure at the 20-day moving average, the contract lost 1,120 yuan/mt from Tuesday to close at 48,550 yuan/mt. Market concerns grew as Turkey doubled tariffs on some US imports such as cars, alcohol and tobacco on Wednesday. The US dollar index retained its robust trend and approached 97. The union for Chile’s Escondida said on Wednesday that it will avert its planned strike to consult members about a renewed proposal for a labour contract from BHP. Tonight, investors would take more guidance from US industrial output and retail sales in July as well as its weekly crude oil inventory data. We see the 1810 contract testing support at 48,000 yuan/mt tonight.

Aluminium: As longs exited with pressure from the macroeconomic developments, the SHFE 1810 contract fell to a low of 14,535 yuan/mt near closing. It closed between the five- and ten-day moving averages with open interests down 5,270 lots to 279,000 lots. The SHFE 1808 contract closed at 14,450 yuan/mt on its last trading day, and settled at 14,470 yuan/mt. The US dollar continued to grow as the euro, Indian rupee, and Russian rouble depreciated. We expect the 1810 contract to test support at the 60-day moving average tonight.

Zinc: The SHFE 1810 contract registered a fourth consecutive day of decline and diverged from all moving averages as shorts increased. It fell to a low of 20,330 yuan/mt and closed 320 yuan/mt lower from Tuesday at 20,500 yuan/mt. As the longer-term moving average of MACD shortened, there is likely to be downward room for the contract tonight. The Bollinger middle band is expected to provide some support. Market participants should monitor the movements of the yuan tonight.

Nickel: As its LME counterpart fell, the SHFE 1811 contract tumbled past 110,000 yuan/mt to 109,520 yuan/mt and closed at 110,000 yuan/mt after it hovered around 111,500 yuan/mt. Its KDJ lines expanded downwards and diverged while the MACD red line shortened. We expect the contract to hover around 110,500 yuan/mt tonight. Market participants can take some cues from US MBA weekly mortgage applications, July's industrial output and retail sales as well as EIA weekly crude oil inventories data.

Lead: As shorts took profits and left, the 1809 contract rebounded from a low of 18,025 yuan/mt. However, as capital flew out during the day, the contract is likely to weaken and test support at 18,050 yuan/mt tonight. The 1808 contract was delivered today with a settlement price of 18,160 yuan/mt. Delivery volumes stood at 8,200 mt.

Tin: The dominant SHFE 1901 contract trended downwards today on a stronger US dollar. It closed at a low of 145,630 yuan/mt, down 1,950 from Tuesday, with open interests up 1,632 lots to 21,448 lots. The contract is likely to extend its decline tonight, with support at 142,500 yuan/mt.

Evening comments Futures movement

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