SMM Evening Comments (Jun 12)

SHANGHAI, Jun 12 (SMM) – SHFE nonferrous metals eased for the most part on Wednesday June 12 as lead lost over 1%, copper slid 0.39%, zinc dipped 0.25%, aluminium fell 0.14%, while nickel jumped 0.95%, and tin grew 0.19%. 

The ferrous complex also ended mostly lower. Coke declined 2.31%, coking coal dropped 1.44%, rebar went down 0.19%, hot-rolled coil edged down, while iron ore continued to advance 2.55%. 

Copper: The most-active SHFE August contract extended its decline from overnight as shorts loaded up their positions at an intraday high of 46,710 yuan/mt in early trades. It stemmed its decline at 46,450 yuan/mt as the prospect of US interest rate cuts depressed the greenback. It ended the trading day 0.39% lower at 46,480 yuan/mt, with open interests up 9,450 lots to 232,000 lots. Tonight, pressure above from the 10-day moving average and the Bollinger middle band are likely to keep the contract struggling at 46,500 yuan/mt. 

Aluminium: The most-traded SHFE August contract lost more than half the gains from the previous day as expanding shorts weighed it to a low of 13,915 yuan/mt, before it ended 0.14% lower on the day at 13,930 yuan/mt. Market focus returned to fundamentals, which remained weak with the upcoming slow season. Tonight, the contract is expected to test support below.  

Zinc: Shorts continued to add their positions and this lowered the most-active SHFE August contract by 0.25% on the day at 20,245 yuan/mt. Open interests accumulated 11,884 lots to 256,000 lots. The backwardation structure intensified as the price spread between the June and July contracts expanded to 660 yuan/mt, from 570 yuan/mt on Tuesday. Fundamentals are likely to provide limited support and keep the contract testing the five-day moving average tonight. 

Nickel: The most-traded SHFE July contract failed to shrug off pressure from the 98,000 yuan/mt level as it hovered between 97,800-98,000 yuan/mt in the morning. It lost support from 97,800 yuan/mt in the afternoon, ending at 97,390 yuan/mt, still up 0.95% on the day. Currently above the Bollinger middle band, the contract is expected to test support from the 10-day moving average tonight. 

Lead: The most-traded SHFE August contract fell below support from the Bollinger middle band, as discounts of secondary refined lead grew. It finished the trading day 1.14% lower at 16,045 yuan/mt, with open interests down 282 lots to 46,190 lots as long exited. Tonight, it is expected to test support from the 16,000 yuan/mt level. 

Tin: The most-liquid SHFE September contract regained losses from overnight as departing shorts lifted prices from a low of 144,750 yuan/mt. It closed 0.19% higher on the day at 145,320 yuan/mt, with support from the 20-day moving average. We see it trading rangebound with pressure from 146,000 yuan/mt tonight.