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SMM Evening Comments (Sep 6)

iconSep 6, 2018 18:18
SMM Evening Comments

SHANGHAI, Sep 6 (SMM) – SHFE nonferrous metals closed mixed on Thursday. Zinc surged close to 2%, copper gained some 0.6%, nickel edged up 0.13% while tin dipped 0.07%, aluminium lost 0.17% and lead slipped 0.38%.

The ferrous complex rose across the board. Coking coal soared 3.7%, iron ore jumped 3.3%, rebar increased close to 1.5%, hot-rolled coil climbed close to 1% and coke gained close to 0.8%.

Market participants tonight can take some cues from the US ADP employment report for August and factory orders for July.

Copper: The SHFE 1811 contract fell past its daily moving average to the 47,400 yuan/mt level after it crept to an intraday high of 47,690 yuan/mt. The contract then rebounded above the daily moving average and ended the trading day 0.64% higher at 47,490 yuan/mt. While the contract was in positive territory, it hovered around lows, suggesting limited upward momentum. Investors should monitor whether the contact could break 47,500 yuan/mt tonight.

Aluminium: The SHFE 1811 contract initially fell to an intraday low of 14,665 yuan/mt before it rebounded to a high of 14,745 yuan/mt. It then dropped and ended the trading day 0.17% lower at 14,685 yuan/mt. On-month spreads narrowed with gaps between September and October, between November and December contracts at less than 50 yuan/mt. This indicated an upbeat outlook over the physical market. Primary aluminium inventories across major consumption areas in China shrank this week, which is likely to provide some buoyancy to prices of futures. We expect the contract to test the five-day moving average tonight and remain rangebound in the short term.

Zinc: The SHFE 1811 contract broke through the resistance at the five- and 40-day moving averages before it slid to close the trading day 1.88% higher at 20,645 yuan/mt. The contract tried but failed twice to stand above the 10-day moving average, signaling strong pressure. However, its K and J lines expanded upwards, suggesting an open upward path. We expect the contract tonight to again test the pressure above.

Nickel: The SHFE 1811 contract rebounded to its daily moving average and closed the trading day 0.13% higher at 102,760 yuan/mt after it plummeted to an intraday low of 101,840 yuan/mt. Open interest for the contract shrank 944 lots to 351,054 lots. We expect the contract to hover around 102,800 yuan/mt tonight.

Lead: The SHFE 1810 contract climbed to 18,665 yuan/mt before it came off to settle the trading day 0.38% lower at 18,595 yuan/mt. Open interest for the contract shrank 922 lots to 59,248 lots. Its five-day moving average expanded downwards, suggesting that the contract is on a downward track. We expect the contract to test support at the 10-day moving average tonight.

Tin: The SHFE 1901 contract continued its overnight decline to an intraday low of 143,470 yuan/mt before it recovered most losses to settle at 144,490 yuan/mt, down 0.07% from the previous day. Support is seen at 142,500 yuan/mt.

Evening comments

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