SMM Evening Comments (Jun 25)

SHANGHAI, Jun 25 (SMM) – SHFE nonferrous metals closed higher across the board on Tuesday, as a Monday phone call between China and US trade officials ahead of a Trump-Xi meeting grew optimism about trade negotiations between the world’s two largest economies.

Base metals also received support from a weaker US dollar amid growing expectations of lower US interest rates.

Zinc saw the biggest gain of 2.4%, lead rose close to 1.3%, nickel climbed 1.1%, aluminium advanced 0.8%, copper gained 0.6% and tin rose 0.3%.

The ferrous complex, except for iron ore, ticked up. Rebar rose 2.2%, hot-rolled coil gained 1.7%, coke inched up 0.1% and coking coal nudged up 0.04%.

Copper: The most active SHFE August contract rebounded in afternoon trade, ending the trading day 0.56% higher at 47,090 yuan/mt. Despite US-China trade optimism, mounting US-Iran tensions kept investors cautious. SHFE copper is expected to try to climb above 47,200 yuan/mt tonight.

Aluminium: As shorts covered their positions, the most traded SHFE August contract climbed in afternoon trade, recovering from earlier losses to close 0.8% higher at 13,910 yuan/mt, above the five-day moving average. SHFE aluminium is likely to continue to struggle to breach the 14,000 yuan/mt level after the market digests the latest development in US-China trade talks.

Zinc: The most liquid SHFE August contract extended overnight gains to close the trading day 2.39% higher at 19,935 yuan/mt. This stemmed recent declines in SHFE zinc and lifted it above the lower Bollinger band. Open interest for the contract shrank close to 26,000 lots on the day. Morale among longs, however, remained poor, which failed to lend strong support to SHFE zinc. The contract is expected to trade between the lower and middle Bollinger bands tonight.

Nickel: The most active SHFE August contract climbed above the 60-day moving average to end the trading day 1.09% higher at 99,630 yuan/mt. Strength at the 60-day moving average is under scrutiny tonight.

Lead: The most traded SHFE August contract remained rangebound during the day, holding onto overnight gains to close the trading day 1.25% higher at 16,235 yuan/mt. Resistance is seen strong at the 60-day moving average, which is unlikely to be broken without a stimulus. The contract is expected to trade between the 60- and 10-day moving averages tonight.

Tin: As shorts trimmed their positions, the most active SHFE September contract rose to an intraday high of 144,230 yuan/mt in morning trade before it finished the trading day 0.26% higher at 144,090 yuan/mt. Support is seen at 143,500 yuan/mt, while resistance is at the 10-day moving average as high as 144,500 yuan/mt.