SMM Evening Comments (Aug 20)

SHANGHAI, Aug 20 (SMM) – Nonferrous metals futures rebounded for the most part as the US dollar softened. SHFE nickel jumped nearly 1.5%, zinc gained 0.93%, copper rose 0.84%, and lead inched up 0.17%. Tin and aluminium fell slightly. 

The ferrous complex extended their increases across the board. Hot-rolled coil soared 4.9%, rebar grew nearly 4%, coking coal rose nearly 3%, coke and iron ore closed over 1% higher. 

Copper: The SHFE 1810 contract received support at the 48,000 yuan/mt level and touched a high of 48,280 yuan/mt in the afternoon with growing long positions. With pressure at the five-day moving average, it closed at 48,250 yuan/mt, 400 yuan/mt higher from last Friday. Open interests declined 16,000 lots to 197,000 lots. We expect the contract to trade within a wide range above the daily moving average tonight. 

Aluminium: With support at the five-day moving average, the SHFE 1810 contract rebounded and touched a high of 14,470 yuan/mt. However, limited confidence from market participants saw it lose 10 yuan/mt from last Friday to close below the 20-day moving average at 14,455 yuan/mt. The contract tonight is expected to again test resistance at the 20-day moving average above. 

Zinc: Shrinking zinc social inventory and high spot premiums helped the SHFE 1810 contract break resistance at the five-day moving average to a high of 20,265 yuan/mt. Lacking further upward momentum, it closed at 20,105 yuan/mt, up 425 yuan/mt from last Friday. As the KDJ indicators expanded upwards, the contract is likely to continue its gains tonight. Investors would take guidance from the movement of LME zinc tonight. 

Nickel: The SHFE 1811 contract was buoyed by a stronger LME nickel to a high of 112,610 yuan/mt, with resistance at the 60-day moving average. It jumped 1,650 yuan/mt from last Friday to close at 112,110 yuan/mt, with open interests falling 13,000 lots to 257,000 lots. As its MACD green line shortened, the contract is likely to hover around 112,200 yuan/mt tonight. 

Lead: Although the SHFE 1810 contract rebounded and closed at 17,530 yuan/mt amid rising base metals prices, it still faced pressure from several moving averages above. We expect it to consolidate at low levels in the short run. 

Tin: The SHFE 1809 contract came off from a high of 143,900 yuan/mt and closed at 142,990 yuan/mt on Monday. It is likely to remain rangebound in the short term with resistance at 145,000 yuan/mt and support at 142,000 yuan/mt. The SHFE 1901 contract closed at 145,120 yuan/mt with open interest at 26,182 lots.