SMM Evening Comments (Sep 18)

SHANGHAI, Sep 18 (SMM) – SHFE nonferrous metals ended in mixed performance on Tuesday. Zinc surged 2.4%, copper jumped 1.1%, tin nudged up 0.06% while lead slipped 0.54%, aluminium lost 0.31% and nickel slid 1%.

The ferrous complex rose across the board. Rebar increased 1.4%, iron ore gained 1%, hot-rolled coil went up 0.9%, coke rose 0.61% and coking coal edged up 0.12%.

Copper: After its LME counterpart opened weak, the SHFE 1811 contract opened lower today and dropped to the 48,200 yuan/mt level. It then crept to an intraday day high of 48,790 yuan/mt with gains in its LME counterpart. A total of 364 million yuan entered the SHFE copper complex today, the most among nonferrous metals. The contract now stands above the 10-day moving average with KDJ lines expanding upwards.

Aluminium: The SHFE 1811 contract extended overnight losses to an intraday low of 14,400 yuan/mt before it regained some losses to close at 14,485 yuan/mt. Market sentimenttook a hit from fresh tariffs by the US. We expect the contract to upwardly test the five-day moving average tonight.

Zinc: The SHFE 1811 contract broke resistance at the 60-day moving average and rose to an intraday high of 21,055 yuan/mt near closing as longs surged. The contract settled 2.96% higher at 21,045 yuan/mt, with open interest up 18,460 lots to 199,000 lots. We expect it to continue to test pressure above tonight. Investors monitor if the contract falls from highs, and should take more guidance from the movement of LME zinc prices tonight.

Nickel: The SHFE 1811 contract fell past 101,000 yuan/mt as shorts added their positions. It then pared those losses as shorts cut their positions and longs added their positions. In the afternoon, it continued to climb to 102,380 yuan/mt and ended at 102,040 yuan/mt as the dollar came off from early highs. Technically, its KDJ lines expanded downwards and the MACD green line shortened. We expect the contract to hover around 101,800 yuan/mt tonight.

Lead: The November contract became the most liquid SHFE lead contract today. It rebounded to end at 18,290 yuan/mt after a buildup of short positions dragged it to an intraday low of 18,085 yuan/mt. We expect it to test pressure at the five-day moving average tonight with support at the 60-day moving average. The 1810 contract recovered some losses to settle at 18,715 yuan/mt after it fell to 18,495 yuan/mt. Open interest for the contract sharply shrank 5,058 lots to 44,658 lots after investors left the market on cautious sentiment.

Tin: The SHFE 1901 contract recovered overnight losses and ended at 144,500 yuan/mt. We expect it to remain rangebound in the short term.