SMM Evening Comments (Jun 18)

SHANGHAI, Jun 18 (SMM) – SHFE nonferrous metals extended their declines for the most part on Tuesday June 18 with nickel leading the losses and ending 1.06% lower. Tin fell 0.72%, zinc lost 0.18%, aluminium dropped 0.11%, while copper gained 0.37%, and lead rose 0.34%. 

The ferrous complex mostly rebounded as iron ore jumped 2.14%, rebar expanded 0.27%, coking coal advanced 0.22%, hot-rolled coil rose 0.19%, while coke slid 1.58%. 

Copper: The most-liquid SHFE August contract traded rangebound with pressure from the 10-day moving average, as the market awaited results of the US Federal Reserve's interest rate meeting. It rebounded from a low of 46,220 yuan/mt near closing, and ended the trading day 0.37% higher at 46,330 yuan/mt. As the MACD red line lengthened, technical support is expected to keep the contract testing the 46,330 yuan/mt level tonight. 

Aluminium: The most-traded SHFE August contract moved away from the five-day moving average as pressure from shorts lowered it below the daily moving average to an intraday low of 13,780 yuan/mt. It lost 0.11% on the day and finished at 13,810 yuan/mt, with open interests up 7,190 lots to 255,000 lots. Fundamentals may continue to keep the contract weak tonight. 

Zinc: The most-active SHFE August contact stemmed decline at around 19,880 yuan/mt and rebounded a little to close at 19,930 yuan/mt, down 0.18% on the day. Shorts exited near closing, but expanding inventories of refined zinc provided limited confidence in longs. This, together with technical pressure above, is likely to cap any upward momentum in the contract tonight. Support from the Bollinger lower band will remain tonight. 

Nickel: Support from the Bollinger middle band prevented the most-active SHFE August contract from falling below the 97,700 yuan/mt level, after it slid below the daily moving average in the afternoon session. It lost 1.06% on the day and closed at 98,180 yuan/mt, with open interests up 1,000 lots to 231,000 lots. We see it testing support from the 20-day moving average, or the 98,000 yuan/mt level tonight. 

Lead: The most-liquid SHFE July contract continued to trade between the 20- and 40-day moving averages, as shorts accumulated at highs and bolstered the contract to 16,140 yuan/mt at closing, up 0.34% on the day. Tonight, it is expected to extend the rangebound trend along with the 10-day moving average. 

Tin: A lower LME tin grew pessimism in the market, and extended the decline in the most-traded SHFE September contract from overnight. The contract fell 0.72% on the day and ended at 143,640 yuan/mt, with open interests expanding 444 lots to 41,514 lots as shorts entered. Tonight, it is expected to test support from 143,000 yuan/mt if it fails to receive the current support from 143,500 yuan/mt. Pressure above is seen from the 10- and 20-day moving averages, or the 144,500 yuan/mt level tonight.