SMM Evening Comments (Jun 3)

SHANGHAI, Jun 3 (SMM) – SHFE nonferrous metals extended their declines across the board on Monday June 3 with the biggest drop of 1.54% in nickel. Zinc fell 1.18%, lead lost 0.62%, copper slid 0.5%, aluminium dropped 0.18%, and tin went down 0.04%. 

The ferrous complex also ended lower as coke decreased 3.87%, iron ore declined 3.47%, coking coal dipped 2.07%, rebar eased 1.64%, and hot-rolled coil slipped 1.54%. 

Copper: The most-active SHFE July contract dropped for the fifth consecutive trading day as longs continued to cover their positions and sent the contract 0.5% lower on the day at 46,130 yuan/mt. As risk aversion sentiment intensified, the contract failed to hold firm at a high of 46,240 yuan/mt, after it rebounded from an intraday low of 46,070 yuan/mt. Open interests lost 12,000 lots to 225,000 lots as longs exited. As the KDJ indicators expanded downwards, the contract is likely to test support from 46,000 yuan/mt tonight. 

Aluminium: Pessimism around macroeconomic development kept the most-traded SHFE July contract at the Bollinger lower band, below the five- 10-, and 20-day moving averages. Exiting longs weighed it to the lowest in nearly a week, at 14,100 yuan/mt, right after it hit a high of 14,165 yuan/mt in early trades. It ended the trading day 0.18% lower at 14,125 yuan/mt, with the MACD green line lengthening. 

Zinc: The most-liquid SHFE July contact unsuccessfully tested resistance from the five-day moving average twice, and slid to a low of 20,465 yuan/mt, ending 1.18% lower on the day at 20,480 yuan/mt. Though domestic refined zinc inventories edged down over the weakened, expectations of a buildup in the near future saw longs covering their positions. Tonight, the contract is expected to test pressure from the 20-day moving average. 

Nickel: The most-active SHFE July contract traded weakly below the daily moving average as trade worries depressed all base metals today. It lost 1.54% on the day and closed at 97,020 yuan/mt, with open interests down 10,000 lots to 185,000 lots. The dominant contract is likely to soon move to the SHFE August contract, which saw an increase of 10,670 lots in open interests today. As the KDJ indicators expanded downwards and the MACD red line shortened, the July contract is seen testing support from 97,000 yuan/mt tonight. 

Lead: The most-traded SHFE July contract dipped after climbed to highs around 16,090 yuan/mt in early trades, as pressure from the 20-day moving average remained. Expanding shorts dragged it to an intraday low of 15,920 yuan/mt, before it ended 0.62% on the day at 15,960 yuan/mt. Pressure from shorts will extend its downside room if it fails to receive support from the crucial 15,800 yuan/mt level tonight. 

Tin: The most-liquid SHFE September contract regained nearly half of the losses from the previous session as it rebounded from a low of 142,530 yuan/mt and ended 0.04% lower on the day at 143,080 yuan/mt. It remained below all moving averages. Support below is expected at 142,000 yuan/mt tonight.