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SMM Evening Comments (Aug 17)
Aug 17,2018 18:12CST
price review forecast
SMM Evening Comments

SHANGHAI, Aug 17 (SMM) – Nonferrous metals saw mixed trades as SHFE nickel led the gains and closed 1.5% higher. While tin and aluminium inched up, copper dipped, lead fell 0.87%, and zinc lost over 1%.

The ferrous complex rose across the board. Coke soared 7.8%, rebar jumped 3.5%, coking coal increased nearly 2%, hot-rolled coil gained 1.4%, and iron ore grew 1.3%. 

Copper: The SHFE 1810 contract extended its rangebound trend from last night. This came after the contract rebounded above the 48,000 yuan/mt level overnight on eased market sentiment from a potential China-US trade talk. A stronger LME copper buoyed the contract to a high of 47,970 yuan/mt in the afternoon, but fell fast near closing as shorts rose. It lost 10 yuan/mt from Thursday to close at 47,700 yuan/mt. We forecast it to hover below 48,000 yuan/mt tonight. Investors would take more guidance tonight from the eurozone’s consumer price index for July.

Aluminium: Amid continued macroeconomic uncertainty, the SHFE 1810 contract failed to stand firm at highs after testing pressure above several times. While it jumped to a high of 14,525 yuan/mt in the morning, declining longs dragged it down sharply in the afternoon to a low of 14,385 yuan/mt. The 14,400 yuan/mt level provided some support. We expect the contract to test pressure at the 10-day moving average above tonight. 

Zinc: The SHFE 1810 contract received support at noon as data showed that zinc inventories across three major Chinese markets shrank some 16,200 mt over the week. With pressure from shorts, it then dipped from a high of 20,130 yuan/mt, and lost all the gains during the day to close at 19,680 yuan/mt. Open interests surged 13,656 lots to 235,000 lots.  The contract may trade weakly rangebound tonight as shorts continue to exert pressure.

Nickel: As market sentiment improved on news that Beijing and Washington will resume trade talks later this month, the SHFE 1811 contract climbed to a high of 111,080 yuan/mt. With pressure from the five-day moving average and a weakened LME nickel, the contract dipped in the afternoon and closed at 110,090 yuan/mt. Some 125 million yuan of capital left across all SHFE nickel contracts, topping base metals. As the KDJ indicators expanded upwards and the MACD green line lengthened, the contract is likely to trade around 110,500 yuan/mt tonight. 

Lead: The dominant contract moved from the SHFE 1809 to the 1810, which touched a low of 17,270 yuan/mt as most base metals weakened in the afternoon. It closed at 17,345 yuan/mt with open interests up 1,778 lots to 48,128 lots. With heavy pressure above, the contract may consolidate at lows in the near term. 

Tin: The SHFE 1809 contract hovered at lows during the day with pressure from several moving averages above. Lacking upward momentum, it is expected to receive support at 141,000 yuan/mt and meet resistance at 144,000 yuan/mt. 

Evening comments
Futures movement

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