SMM Evening Comments (May 31)

SHANGHAI, May 31 (SMM) – SHFE nonferrous metals, except for aluminium, declined across the board on Friday May 31 with the biggest loss of 1.15% in lead. Copper slid 0.94%, zinc lost 0.6%, tin fell 0.46%, and nickel dropped 0.11%. 

The ferrous complex also ended lower as coke decreased 3.86%, iron ore dipped 1.62%, rebar went down 1.47%, coking coal fell 1.11%, and hot-rolled coil closed 0.9% lower. 

Copper: The most-traded SHFE July contract dropped from a high of 46,520 yuan/mt at noon, as longs exited after official data showed that China’s factory activity shrank more than expected in May. The contract dipped to a low of 46,130 yuan/mt and finished the trading day 0.94% lower at 46,180 yuan/mt. With the KDJ indicators expanding downwards, weak technical support is likely to see the contract struggling to stand above 46,000 yuan/mt tonight. 

Aluminium: With pressure from the 20-day moving average, the most-active SHFE July contract hovered within a broad range and ended the day flat at 14,155 yuan/mt. As the MACD green line lengthened, it is expected to consolidate between 14,130-14,200 yuan/mt tonight. 

Zinc: A buildup in social inventories of refined zinc dragged the most-traded SHFE July contract to the five-day moving average, after it tested pressure from the daily moving average around the 20,810 yuan/mt level. Accumulated shorts further weighed it in the afternoon, to a low of 20,525 yuan/mt, before it closed at 20,545 yuan/mt, down 0.6% on the day. The upcoming supply recovery grew bearish outlook on prices of back-month SHFE contracts. Tonight, the July contract is expected to test support from the 10-day moving average. 

Nickel: With support from the 98,000 yuan/mt level, the most-liquid SHFE July contract stemmed its decline at 98,200 yuan/mt, and ended the trading day 0.11% lower at 98,270 yuan/mt. As the KDJ indicators expanded downwards and the MACD red line shortened, the contract will continue to test support from 98,000 yuan/mt tonight. 

Lead: As base metals weakened across the board around noon, the most-traded SHFE July contract fell below support from 16,000 yuan/mt, to an intraday low of 15,920 yuan/mt. It ended 1.15% lower on the day at 15,925 yuan/mt, with open interests up 1,194 lots to 52,402 lots as shorts added their positions. With support from 15,800 yuan/mt, the contract is likely to trade rangebound tonight. 

Tin: The most-liquid SHFE September contract extended its rangebound trend below all moving averages. It finished the trading day 0.46% lower at 143,380 yuan/mt, with an intraday low of 142,800 yuan/mt. Support below is expected at 142,000 yuan/mt, or 140,000 yuan/mt tonight.