SMM Evening Comments (Sep 3)

SHANGHAI, Sep 3 (SMM) –

Copper: The November contract became the most active SHFE copper contract today. The SHFE 1811 contract notched a new two-week low at 47,850 yuan/mt after Caixin reported that the purchasing managers’ index (PMI) for China’s manufacturing sector hit a 14-month low in August. It then rebounded and closed the trading day 0.86% lower at 48,150 yuan/mt. Open interest for the SHFE copper contracts increased above 600,000 lots today. We expect the contract to trade at 48,000-48,200 yuan/mt tonight.

Aluminium: The dominant contract moved from the SHFE 1810 to the SHFE 1811 contract, which saw open interests rising 13,166 lots to 251,000 lots. The 1811 contract tested resistance at the 15,000 yuan/mt level twice but failed. Strong support was seen at 14,800 yuan/mt. The US will decide on potential tariffs on $200 billion of Chinese goods this week, and this grew market concerns. Tonight, the contract may continue to test pressure at the five-day moving average above.

Zinc: The SHFE 1810 contract regained some losses and settled the trading day 0.42% lower at 21,195 yuan/mt after it plunged past 21,000 yuan/mt to the 20,850 yuan/mt level. Open interest for the contract shrank 10,212 lots to 202,480 lots. The contract is unlikely to extend its losses tonight given support at the 20- and 40-day moving averages that adhere to each other. SHFE warrants decreased to 2,476 mt today, which is also expected to provide some support to SHFE zinc prices.

Nickel: The SHFE 1811 contract traded rangebound below the daily moving average during the day and closed the trading day 3.2% lower at 105,130 yuan/mt. Open interest for the contract grew some 40,538 lots to 348,066 lots. Its KDJ lines diverged and expanded downwards while the MACD green line lengthened. We expect the contract to hover around 105,100 yuan/mt tonight.

Lead: The SHFE 1810 contract fell below its daily moving average after it jumped to an intraday high of 19,030 yuan/mt. It then recovered some losses and ended the trading day 0.96% higher at 18,865 yuan/mt. Lead was the only SHFE nonferrous metal that ended the trading day in positive territory. Strong pressure was seen at 19,000 yuan/mt. Open interest for the contract grew 906 lots to 65,370 lots. We expect the contract to extend its gains tonight.

Tin: The SHFE 1901 contract fell to close at 145,400 yuan/mt after it hovered around 145,600 yuan/mt. US potential tariffs on Chinese goods worth of $200 billion grew bearish sentiment across the market. The contract is likely to remain rangebound under pressure in the short term with support at 144,500 yuan/mt.