SMM Evening Comments (Oct 19)

SHANGHAI, Oct 19 (SMM) – SHFE nonferrous contracts closed mixed while the ferrous complex fell across the board on Friday. 

SHFE nickel increased 1.65%, zinc grew 0.11%, copper nudged up 0.02%, while lead slumped 1.39%, tin lost 0.84%, and aluminium went down 0.07%.

Coke plunged 3.92%, coking coal slumped 2.55%, rebar fell 2.04%, iron ore dipped 1.62%, and hot-rolled coil fell 1.4%.

Copper: The SHFE 1812 contract dipped twice to a low of 49,850 yuan/mt in the morning, but longs buoyed it in the afternoon to a high of 50,210 yuan/mt. It closed at 50,160 yuan/mt, with open interests across all SHFE copper contracts down further to 527,400 lots. While the 20-day moving average provided support, heavy pressure was seen at the five-day moving average. It is expected to test support at its current level tonight. 

Aluminium: The SHFE 1812 contract rallied from a low of 14,065 yuan/mt, but upward momentum slowed its growth near closing. It settled at 14,145 yuan/mt with open interests up 5,160 lots to 234,000 lots. We expect it to test pressure at the five-day moving average tonight. 

Zinc: A dip in zinc social inventories supported the SHFE 1812 contract, which rebounded above the daily moving average to a high of 22,240 yuan/mt. It closed 70 yuan/mt higher from Thursday at 22,140 yuan/mt. With support at the five-day moving average, there will be limited downward room tonight. The contract may consolidate around 22,000 yuan/mt tonight. 

Nickel: Declining shorts pulled up the SHFE 1901 contract to broke pressure at the five-day moving average in the afternoon. It faced resistance at the 10-day moving average after climbing to an intraday high of 103,780 yuan/mt. The contract settled at 103,440 yuan/mt, with open interests down 27,000 lots to 268,000 lots. As its KDJ indicators expanded upwards, we expect the contract to hover around 102,500 yuan/mt tonight. Key data to monitor tonight include the US existing home sales for September. 

Lead: Longs left the market on expectations that the SHFE 1811 contract would continue its weak trend today, and this dragged prices below the daily moving average, to a low of 18,260 yuan/mt. Open interests shrank 6,008 lots to 39,484 lots, as the contract settled at 18,275 yuan/mt, marking the fourth consecutive trading day of decline. Despite support at the 20-, 40-, and 60-day moving averages, a lack of confidence in longs will extend the weak trend of the contract tonight. 

Tin: The SHFE 1901 contract fell sharply to a low of 146,250 yuan/mt after opening, and failed to rebound much during the day, closing at 146,850 yuan/mt. Exiting longs accounted for the slump. Support below is set at 146,000 yuan/mt tonight.