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SMM Evening Comments (Nov 1)
Nov 1,2018 18:00CST
price review forecast
SMM Evening Comments

SHANGHAI, Nov 1 (SMM) – The SHFE nonferrous contracts and ferrous complexes, except for SHFE lead, extended their declines across the board on Thursday. 

SHFE nickel led losses and fell 1.6%, aluminium slid 1.1%, copper dipped 0.87%, zinc lost 0.5%, tin went down 0.03%, while lead closed 2.32% higher.  

Hot-rolled coil slumped 3.27%, iron ore slid 2.53%, rebar lost 1.9%, coke declined 1.7%, and coking coal fell 0.04%.     

Copper: The SHFE 1812 contract struggled below the 48,800 yuan/mt level in the morning, but fell sharply in the afternoon to a low of 48,450 yuan/mt before closing as longs left the market. With its MACD green line extending and the KDJ indicators moving downwards, the contract closed at 48,670 yuan/mt, down 420 yuan/mt from October 31. We see it testing support at 48,500 yuan/mt tonight.  

Aluminium: The SHFE 1901 contract continued to diverge from the 60-day moving average as shorts weighed it to the lowest since mid-June, at 13,835 yuan/mt in the afternoon. It settled at 13,860 yuan/mt, with the MACD green line lengthening, and open interests gaining 7,626 lots. We expect it to test resistance above at the five-day moving average tonight.  

Zinc: The SHFE 1812 contract extended its weak trend from last night and dipped to an intraday low of 21,305 yuan/mt after opening. As its open interests lost some 11,610 lots, dominant contract changed into the SHFE 1901 contract today, which open interests grew 5,700 lots. Limited upward momentum saw the 1901 contract fall 275 yuan/mt from Wednesday, and close at 21,095 yuan/mt. As longs and shorts competed during the day, the 1901 contract may continue to struggle around the daily moving average tonight. 

Nickel: Pessimism among investors lowered the SHFE 1901 contract for six consecutive trading days, as the contract settled at 96,730 yuan/mt today.Support was seen at 96,000 yuan/mt after it fell to 96,010 yuan/mt, the lowest in nearly 11 months. We expect it to test support at 96,000 yuan/mt tonight as its MACD green line lengthened. Investors may take more cues tonight from the US Markit manufacturing purchasing managers’ index for October and its weekly jobless claims.

Lead: Lead production from new capacity increased less than expected in Anhui province, and this buoyed the SHFE 1812 contract above the five-day moving average. Environmental probes from the central government’s inspection team also bolstered confidence across longs. This saw the 1812 contract trade robustly during the day and settle at 18,740 yuan/mt, up 425 yuan/mt from Wednesday. Open interests grew 6,720 lots to 59,480 lots. The robust trend is likely to extend tonight. 

Tin: News of potential tighter supplies of tin ore from Myanmar attracted longs. This bolstered the SHFE 1901 contract to a high of 146,180 yuan/mt before noon. But the contract still closed lower from Wednesday, at 145,850 yuan/mt, with open interests up 944 lots. It will continue to test pressure above tonight. 

Evening comments
Futures movement

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