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SMM Evening Comments (Oct 15)

iconOct 15, 2018 18:00
Source:SMM
SMM Evening Comments

SHANGHAI, Oct 15 (SMM) – SHFE nonferrous metals closed Monday mostly down as zinc led the losses and slumped 2.99%. Tin fell 0.76%, aluminium slid 0.46%, copper lost 0.3%, nickel went down 0.11%, while lead jumped 1.1%.

The ferrous complex closed mixed as rebar increased 1.59%, hot-rolled coil gained 1.35%, coking coal declined 1.35%, iron ore dipped 0.88%, and coke went down 0.42%. 

Copper: The SHFE 1811 contract came off from an intraday high of 50,930 yuan/mt, to fall below the daily moving average as longs lost confidence. However, high expectations of demand from the infrastructure sector in Q4 and current record-low inventories of copper across three consumption areas buoyed the contract above the 120-day moving average. The contract settled at 50,570 yuan/mt, with open interests down 4,498 lots to 178,000 lots. Some 223 million yuan of capital left SHFE copper contracts today. The 1811 contract may test pressure at 51,000 yuan/mt above. Tonight, investors should take guidance from data of US retail sales for September. 

Aluminium: As the US extended its deadline for sanctions on Russian aluminium and as prices of alumina fell, the SHFE 1812 contract fell quickly after opening. The contract then hovered around 14,190 yuan/mt and closed at 14,180 yuan/mt, with an intraday low at 14,160 yuan/mt. The SHFE 1810 contract was delivered today, with a settlement price of 14,128 yuan/mt and delivered volume at 143,950 lots. We see the dominant December contract testing resistance at the five-day moving average tonight. 

Zinc: As longs aggressively cut their positions, the SHFE 1811 contract plunged during the day and closed at 22,555 yuan/mt. Gains in social inventories across Shanghai, Tianjin and Guangdong and sluggish consumption weighed on zinc prices. The contract is likely to remain weak tonight, but the strong performance of its LME counterpart during European trading hours might provide some support. The 1810 contract expired today with 33,450 mt of cargoes delivered, the greatest volume thus far this year. The contract lost some 3% today and the settlement price stood at 23,690 yuan/mt. SHFE warrants grew 18,060 mt from Friday October 12 to come in at 32,464 mt as of Monday October 15.

Nickel: The SHFE 1901 contract faced pressure at 106,000 yuan/mt after rebounded to a high of 105,760 yuan/mt. It extended its declines in the afternoon, as shorts surged in the market, to dip to an intraday low of 104,150 yuan/mt and settled at that level. Open interests grew 9,000 lots to 193,000 lots. As its KDJ indicators expanded downward and the MACD red line shortened, the contract is expected to hover around 104,500 yuan/mt tonight. 

Lead: The SHFE 1811 contract registered the seventh consecutive trading day of increase as it climbed to a high of 18,995 yuan/mt in the morning, and settled at 18,815 yuan/mt. As SHFE base metals weakened, the contract slid in the afternoon as longs took profits and left, with support at the 18,770 yuan/mt level. It is likely to face strong pressure above at 19,000 yuan/mt tonight. 

Tin: Surging shorts weighed the SHFE 1901 contract to around 146,800 yuan/mt in the morning. It traded rangebound at that level and closed at 146,890 yuan/mt. Negative fundamentals will continue to depress the contract in the short run. Support below is set at 146,000 yuan/mt. 

Evening comments
Futures movement

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