SMM Evening Comments (Oct 29)

SHANGHAI, Oct 29 (SMM) – The SHFE nonferrous contracts and ferrous complex, except for SHFE lead and iron ore, fell across the board on Monday.  

SHFE nickel led losses and fell 2.54%, tin slid 0.62%, copper dipped 0.46%, zinc lost 0.09, aluminium went down 0.04%, while lead grew 0.75%. 

Coke slumped 3.3%, hot-rolled coil plunged 2.76%, coking coal lost 2.08%, rebar declined 1.64%, while iron ore increased 0.65%. 

Copper: The SHFE 1812 contract fell below the Bollinger middle band with open interests of all SHFE copper contracts at 493,000 lots. It also lost support at the 20-day moving average as it fell to an intraday low of 49,710 yuan/mt. As its MACD green line expands, the contract may continue to test support at 49,500 yuan/mt tonight. 

Aluminium: The SHFE 1812 contract came off from a high of 14,265 yuan/mt after surging longs increased open interests by some 4,000 lots right after opening. It closed at 14,190 yuan/mt after it dipped to a low of 14,155 yuan/mt. Winter cuts across the nonferrous sector in Henan and Shandong provinces missed expectations, and this grew market pessimism. The contract may continue to test resistance at the five- and 10-day moving averages tonight. 

Zinc: The SHFE 1812 contract failed to stand firm above the daily moving average as investors cut their longs. It fell below the 10-day moving average to a low of 22,020 yuan/mt near closing. Social inventories of zinc across three major consumption areas inched up, and this depressed confidence across longs. Open interest lost 3,936 lots to 167,000 lots. The contract is likely to extend its weak trend tonight and to test support at 22,000 yuan/mt. 

Nickel: The SHFE 1901 contract rallied after it slumped to an initial low of 98,700 yuan/mt but failed to stay firm at that level as investors again cut their longs and added shorts. It plunged to a seven-month low of 98,150 yuan/mt and settled at 98,210 yuan/mt, with open interests down some 20,000 lots. We expect the contract to hover around 99,000 yuan/mt tonight as its KDJ indicators expanded downwards and the MACD green line lengthened. Investors may take more cues tonight from the US personal consumption expenditures (PCE) and its personal income for September. 

Lead: The SHFE 1812 contract extended its gain overnight as it rebounded above the 18,555 yuan/mt level after it slid to an intraday low of 18,455 yuan/mt. It registered a fourth consecutive trading day of increase as it settled at 18,560 yuan/mt, with open interest up 420 lots to 53,198 lots. It is set to test pressure at 18,685 yuan/mt tonight. 

Tin: Accumulated shorts dragged the SHFE 1901 contract below the 60-day moving average to an intraday low of 146,550 yuan/mt in the morning. The contract hovered around that level before closing at 146,690 yuan/mt. Support below is expected at 146,000 yuan/mt in the short run.