SMM Evening Comments (Sep 13)

Price Review & Forecast 05:29PM Sep 13, 2018 Source:SMM

SHANGHAI, Sep 13 (SMM) – SHFE nonferrous metals ended with mixed performance on Thursday. Nickel and zinc surged 2.6%, copper jumped over 2%, lead gained 0.7% while aluminium lost 0.65% and tin edged down 0.04%.

The ferrous complex, except for coke, rose across the board. Iron ore climbed close to 3%, coking coal increased 1.9%, hot-rolled coil rose 1.1% and rebar went up 0.25%.

Copper: The SHFE 1811 contract climbed to an intraday high of 48,660 yuan/mt and settled at 48,620 yuan/mt as surges in its LME counterpart encouraged longs to build positions. The backwardation structure between the September-December contracts lingered and the spread between the September and October contracts widened to 140-170 yuan/mt. The contract shrugged off its previous rangebound pattern today and is likely to test the 40-day moving average tonight.

Aluminium: The SHFE 1811 contract tumbled to a low of 14,495 yuan/mt from an intraday high of 14,625 yuan/mt with pressure above and a lack of momentum. While the contract traded lower from the previous day, it remained above the 60-day moving average. We expect it to rise to test the five- and 40-day moving averages tonight. Developments in US sanctions on Rusal and Hydro’s alumina refinery in Brazil will be key determinants.

Zinc: Improved market sentiment buoyed the SHFE 1811 contract to exceed the 40-day moving average, to an intraday high of 20,890 yuan/mt. It settled 435 yuan/mt higher from Wednesday at 20,860 yuan/mt, with open interests down 4,708 lots to 180,000 lots. The contract closed above the Bollinger middle band today, but limited upward room is expected tonight with much pressure above at 21,000 yuan/mt and the 60-day moving average.

Nickel: The SHFE 1811 contract extended overnight gains to end at 103,890 yuan/mt. A total of 258 million yuan flowed out of the SHFE nickel contracts today, the most among nonferrous metals. Its KDJ lines expanded upwards while MACD green line shortened. We expect it to hover around 103,700 yuan/mt tonight.

Lead: The SHFE 1810 contract rebounded to the daily moving average after it fell past the five- and 10-day moving averages. As some risk-averse longs covered their positions, the contract dipped to close at 18,835 yuan/mt. Risk-averse sentiment has weighed on longs for two consecutive days, indicating concerns over current highs. There was significant pressure at 19,000 yuan/mt. We expect the contract to test support at the 10-day moving average tonight.

Tin: As some shorts took profits and cut their positions, the SHFE 1901 contract regained some losses to end at 144,390 yuan/mt after a buildup of shorts dragged it to 144,000 yuan/mt. We expect it to remain rangebound under pressure in the short term with resistance at 145,500 yuan/mt and support at 143,000 yuan/mt.

Key Words:  Evening comments   Copper   Aluminium   Zinc   Nickel   Tin   Lead