SMM Evening Comments (Oct 11)

Price Review & Forecast 05:57:36PM Oct 11, 2018 Source:SMM

SHANGHAI, Oct 11 (SMM) – SHFE nonferrous metals closed Thursday mostly down as US markets slumped. Nickel led the losses and fell 2.57%, aluminium lost 2.18%, copper slid 1.67%, lead fell 0.68%, zinc dipped 0.4%, while tin nudged up. 

Ferrous complex settled mixed as coking coal grew 0.85%, coke rose 0.35%, rebar went up 0.32%, iron ore lost 0.49%, and hot-rolled coil declined 1.01%. 

Copper: Declining long positions dragged the SHFE 1811 contract below 50,000 yuan/mt. Pessimistic sentiment extended to commodities after US stocks plunged. The contract also lost support at the 10-day moving average today, with some 340 million yuan of capital exiting SHFE copper contracts. We see the 1811 contract testing pressure at 50,000 yuan/mt tonight. 

Aluminium: Weaker cost support, greater supplies of ingots, and slow downstream demand depressed the SHFE 1811 contract close to the 14,000 yuan/mt level. A weaker US stock market and falling base metals contracts also weighed on market sentiment. The contract settled at 14,185 yuan/mt with open interests down 5,412 lots. It is likely to test resistance at the five-day moving average tonight. 

Zinc: The SHFE 1811 contract received support at the five-day moving average after falling to a low of 22,455 yuan/mt. It returned above the daily moving average but exiting longs lowered the contract near closing. We do not expect the contract to decline significantly tonight thanks to buoyance from the five-day moving average. 

Nickel: The SHFE 1901 contract fell below the five- 10-, and 20-day moving averages as the US stock markets dived, triggered by comments from President Donald Trump that US interest rate hikes were "crazy". Rising shorts again dragged the contract to an intraday low of 103,040 yuan/mt near closing. It settled at 103,170 yuan/mt with open interests up 11,000 lots to 175,000 lots. As its KDJ indicators expanded downwards and the MACD red line shortened, the contract is expected to hover around 103,000 yuan/mt and test pressure at the 20-day moving average tonight. Key factors to watch tonight include the US weekly jobless claims, consumer price index (CPI) for September, and changes in crude oil inventories. 

Lead: The SHFE 1811 contract tried to rally twice but faced heavy pressure from the daily moving average. It closed at 18,210 yuan/mt after falling to a low of 18,060 yuan/mt. Open interests increased 3,742 lots to 54,406 lots. Tonight, we expected the contract to test pressure at the 20-day moving average, with support from the 40-day moving average. 

Tin: The SHFE 1901 contract stayed relatively firm around 147,000 yuan/mt when other base metals slid amid volatile financial markets. With support at 146,000 yuan/mt and pressure at 148,000 yuan/mt, the contract may consolidate at the current level tonight.