SMM Evening Comments (May 30)

SHANGHAI, May 30 (SMM) – SHFE nonferrous metals extended their declines for the most part on Thursday May 30 as tin lost 1.7%, copper fell 0.9%, nickel dropped 0.7%, aluminium decreased 0.6%, while zinc rebounded 0.4%, and lead gained 1.3%. 

The ferrous complex, except for coking coal, also ended lower as rebar slid 1.1%, coke dipped 0.7%, hot-rolled coil eased 0.6%, and iron ore went down 0.5%. 

Copper: Investors added their shorts as risk aversion intensified, and this depressed the most-active SHFE July contract from a high of 46,780 yuan/mt in early trades. A stronger US dollar drove the contract to an intraday low of 46,450 yuan/mt around noon, and settled it 0.94% lower on the day at 46,550 yuan/mt. With the KDJ indicators expanding downwards, a lack of strong technical support is likely to see the contract struggling at 46,000 yuan/mt tonight. 

Aluminium: The most-traded SHFE July contract dipped to a low of 14,115 yuan/mt as shorts loaded up their positions by nearly 4,000 lots after opening. It recovered some ground and ended the day 0.56% lower at 14,140 yuan/mt, the third consecutive trading day of decline. Prices of alumina stemmed increase and this provided limited support to aluminium prices. However, continued weekly decline by some 70,000 mt in social inventories of primary aluminium indicated firm downstream demand. Tonight, the contract is likely to hover between 14,140-14,200 yuan/mt. 

Zinc: A stronger LME zinc boosted the most-traded SHFE July contract from a low of 20,590 yuan/mt, to an intraday high of 20,805 yuan/mt, before the contract ended 0.36% higher on the day at 20,725 yuan/mt. However, slow spot trades grew concerns about limited upward momentum in the contract. It may test pressure from the 20-day moving average tonight. 

Nickel: The most-liquid SHFE July contract found support from 97,800 yuan/mt after a higher US dollar drove it to a low of 97,830 yuan/mt. It lost 0.7% on the day and closed at 98,190 yuan/mt, with open interests down 12,200 mt to 211,000 lots. As the KDJ indictors expanded downwards and the MACD red line shortened, the contract is expected to test support from 98,000 yuan/mt tonight. 

Lead: The most-active SHFE July contract consolidated above the daily moving average today, with support from 16,100 yuan/mt. It recovered losses from overnight and finished the trading day 1.32% higher at 16,175 yuan/mt. We expect it to extend the rangebound trend between 15,800-16,300 yuan/mt tonight.  

Tin: An increase in LME tin inventories pressured tin prices, as the most-active SHFE September contract slipped to a low of 143,100 yuan/mt and closed the trading day 1.73% lower at 143,140 yuan/mt. Support below is expected at 143,000 yuan/mt tonight.