SMM Evening Comments (Jun 6)

SHANGHAI, Jun 6 (SMM) – SHFE nonferrous metals ended mixed on Thursday June 6 with zinc leading the gains and rising 1.58%. Lead jumped 0.47%, tin nudged up, while copper lost 0.95%, aluminium fell 0.82%, and nickel dropped 0.65%. 

The ferrous complex slid for the most part as iron ore decreased 0.84%, rebar dipped 0.16%, hot-rolled coil edged down, while coking coal grew 0.8%, and coke advanced 1.66%. 

Copper: A rebound in the US dollar saw shorts loading up their positions and depressed the most-active SHFE July contract to lows around 45,870 yuan/mt in early trades. It lost support from the 46,000 yuan/mt level and ended the trading day 0.95% lower at 46,010 yuan/mt. The dominant contract is likely to shift to the August contract, whose open interests expanded 11,000 lots to 200,000 lots, while that in the July contract climbed 900 lots to 212,000 lots. A higher greenback and bearish signs around the KDJ indicators are likely to keep copper prices at lows. The Shanghai Futures Exchange will close tonight for the Dragon Boat Festival holiday. 

Aluminium: Though stocks of primary aluminium continued to fall this week, expectations of poorer consumption in a slow season extended the decline in the most-active SHFE July contract from overnight. The contract fell below the 60-day moving average to the lowest since May 7, at 13,950 yuan/mt. It settled at that level, down 0.82% on the day. The MACD green line lengthened and the KDJ indicators expanded downwards. 

Zinc: Lower inventories of refined zinc across domestic social warehouses bolstered the most-active SHFE August contract. It shrugged off pressure from the five- and 10-day moving averages, ending 1.58% higher on the day at 20,250 yuan/mt. The intraday high stood at 20,295 yuan/mt. Open interests shrank 15,036 lots to 252,000 lots as shorts exited. The SHFE July contract posted a greater rebound as it ended 1.92% higher at 20,690 yuan/mt. The backwardation structure is likely to intensify in the short term. 

Nickel: The most-traded SHFE July contract fell below the Bollinger lower band, to the lowest since February at 94,280 yuan/mt, as longs covered their positions. Support from the daily moving average, or the 95,600 yuan/mt level settled the contract 0.65% lower on the day, at 95,700 yuan/mt. Open interests lost 200 lots to 184,000 lots today. 

Lead: A stronger LME lead failed to extend an increase in the most-active SHFE July contract as the contract stopped rising at 16,145 yuan/mt. It ended 0.47% higher on the day at 16,090 yuan/mt. Support from the 16,000 yuan/mt level will be crucial for lead prices before fundamentals improve. 

Tin: The most-liquid SHFE September contract hovered at lows for the fifth consecutive trading day as it traded around the five-day moving average and finished the session 0.08% higher at 143,300 yuan/mt. Support below is seen at 142,000 yuan/mt in the short term, with pressure from 144,500 yuan/mt.