SMM Evening Comments (Sep 5)

SHANGHAI, Sep 5 (SMM) – SHFE nonferrous metals, except tin, ended in negative territory on Wednesday September 5 as investors remained cautious ahead of the deadline in the US-Sino tariff war.

Turmoil in emerging markets and a strong US dollar, buoyed by robust economic data, also weighed on base metals.

Nickel and zinc slumped close to 2%, lead tumbled 1.7%, aluminium lost 1.2%, copper sank close to 1% while tin gained 0.74%.

The ferrous complex closed mixed. Coking coal increased 1.1%, coke rose 0.78%, iron ore inched up 0.52% while rebar slid 0.37% and hot-rolled coil slipped 0.61%.

Copper: The SHFE 1811 contract closed lower for six consecutive days and settled at 47,410 yuan/mt today. The contract opened lower and fell to low close to level since July 2017. It then climbed to an intraday high of 47,430 yuan/mt after it hovered above 47,200 yuan/mt. Open interest for the contract grew 13,454 lots to 192,980 lots. About 470 million yuan entered the SHFE copper complex today, which offset all losses across other nonferrous metals and reflected the dominance of shorts. We expect the contract to trade rangebound at 47,000-47,500 yuan/mt tonight.

Aluminium: The most active SHFE aluminium contract ended in negative territory for six consecutive days and settled at 14,670 yuan/mt today. The contract fell to an intraday low of 14,660 yuan/mt after it hovered around 14,710 yuan/mt. The 1811 contract became the most traded SHFE aluminium contract today. Investors remained cautious ahead of the deadline for US tariffs on $200 billion of Chinese goods. Technically, the contract fell past the five- and 10-day moving averages and is likely to test the 20-day moving average tonight. Support is likely to be sustained at 14,600 yuan/mt.

Zinc: The November contract became the most liquid SHFE zinc contract today. The contract fell towards its overnight low of 20,120 yuan/mt before it found some support and closed 1.94% lower at 20,235 yuan/mt. The most active SHFE zinc contract has ended in the red for three consecutive days and its trading level continued to fall. Pressure is seen at the 20-day moving average and support is seen at 20,000 yuan/mt.

Nickel: The SHFE 1811 contract recovered some losses and settled at 102,330 yuan/mt after it fell to 102,000 yuan/mt. Technically, its KDJ lines diverged and expanded downwards while the MACD green line lengthened. We expect it to hover around 102,500 yuan/mt tonight.

Lead: The SHFE 1810 contract regained some losses and settled the trading day 1.71% lower at 18,665 yuan/mt after it dropped to an intraday low of 18,470 yuan/mt. Technically, the contract broke support at the five-day moving average but support remained strong at the 10-day moving average. We expect it to test support at the 10-day moving average tonight.

Tin: The SHFE 1901 contract initially rose to 145,480 yuan/mt before it tumbled to 144,700 yuan/mt. It then rebounded and closed at 145,410 yuan/mt. While SHFE tin was the only nonferrous metal that ended in positive territory today, the market retained its bearish sentiment and longs did not add their positions. We expect the contract to remain rangebound with resistance at 146,000 yuan/mt.