SMM Evening Comments (Oct 17)

SHANGHAI, Oct 17 (SMM) – SHFE nonferrous metals closed Wednesday mostly down while the ferrous complex increased across the board. 

Lead led losses and fell 1.11%, nickel lost 0.48%, copper declined 0.44%, zinc dipped 0.04%, while aluminium gained 0.56%, and tin went up 0.78%. 

Iron ore increased 2.65%, coking coal surged 2.53%, coke increased 1.84%, rebar rose 1.45%, and hot-rolled coil picked up 0.63%.

Copper: A stronger US dollar weighed the SHFE 1811 contract to an intraday low of 50,030 yuan/mt in the afternoon. As shorts took profits and left, the contract rebounded above the daily moving average, with resistance at the five- and 10-day moving averages. Some 1.76 million yuan of capital left all SHFE copper contracts. As its MACD red line continue to shorten and the KDJ indicators expanded downwards, the contract will test support at the 50,000 yuan/mt level tonight. 

Aluminium: There was limited upward momentum after the SHFE 1812 contract rose to an intraday high of 14,345 yuan/mt, buoyed by rising longs. It hovered around 14,305 yuan/mt, and closed at 14,300 yuan/mt, above the Bollinger lower band. Smaller support from costs and poorer downstream consumption will limit its upward potential in the short run. Tonight, the contract may continue to test pressure at the ten-day moving average above.

Zinc: The SHFE 1811 contract rallied above the daily moving average in the afternoon after exiting longs dragged it to a low of 22,265 yuan/mt. The contract settled at 22,385 yuan/mt, up 145 yuan/mt from Tuesday, with open interests down 9,850 lots to 159,000 lots. It is likely to extend its robust trend tonight. 

Nickel: The SHFE 1901 contract received support at 102,000 yuan/mt after it tumbled to a low of 102,240 yuan/mt as shorts rose. It failed to stand above the five-day moving average in the afternoon when longs buoyed it to the highest level of the day at 103,440 yuan/mt. It settled at 103,140 yuan/mt with open interests up 8,000 lots to 262,000 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 five-day moving average tonight. Key data to monitor tonight include the US new house starts for September and weekly changes in crude oil inventories. 

Lead: The SHFE 1811 contract registered the second consecutive day of decline as it fell 210 yuan/mt from Tuesday to settle at 18,670 yuan/mt. Longs lost some confidence and left the market, with open interests down 2,088 lots to 50,058 lots. Support remained at the five-day moving average today, and the contract is expected to test support at the same level tonight. 

Tin: The SHFE 1901 contract traded robustly while most other base metals declined. It settled 880 yuan/mt higher from Tuesday, at an intraday high of 148,600 yuan/mt. Pressure above was at 149,000 yuan/mt. We expect the contract to continue its strong performance tonight.