SMM Evening Comments (Jul 2)

SHANGHAI, Jul 2 (SMM) – SHFE nonferrous metals, except for lead, closed lower on Tuesday, with the biggest loss of 5% in tin. Nickel tumbled 3.5%, zinc dropped 1.5%, copper shed 1.4% and aluminium lost 0.5%.

The ferrous complex traded mixed. Hot-rolled coil declined 1.8% and rebar fell 1.3% while coke gained 0.3%, coking coal advanced 0.6% and iron ore jumped 5.2%.

Copper: The most active SHFE August contract traded rangebound during the day, failing to recover from overnight losses and ending 1.38% lower at 46,610 yuan/mt. The unwinding of long positions primarily accounted for today’s decline, suggesting that euphoria over a US-China trade truce gave way to lingering concerns about a global downturn after Europe posted downbeat economic data. A low consumption season and rising inventories will continue to weigh on copper prices. The contract has fallen below the middle Bollinger band, with downwards expanding KDJ lines and a shortened MACD red bar. Strength at the 46,600 yuan/mt level is under scrutiny tonight.

Aluminium: The most liquid SHFE August contract climbed during the day, recovering from overnight losses to end the trading day 0.51% lower at 13,710 yuan/mt. Falling inventories are expected to continue to support prices. The contract is expected to test support at 13,500 yuan/mt in the short term.

Zinc: The most traded SHFE August contract traded rangebound during the day and failed to recover from overnight losses to close the trading day 1.51% lower at 19,615 yuan/mt. This lowered it below all short-term moving averages and near the lower Bollinger band. Downbeat factory activity data out of major economies across the world grew worries about demand. Support from the lower Bollinger band for the SHFE 1908 contract is under scrutiny tonight.

Nickel: The most traded SHFE August contract extended overnight losses to finish the trading day 3.48% lower at 97,510 yuan/mt, posting a three-day losing streak. Losses have lowered the contract below all short-term moving averages and the middle Bollinger band. The contract is expected to remain weak and hover around 97,000 yuan/mt tonight.

Lead: The most active SHFE August contract climbed to a high of 16,260 yuan/mt in early morning trade before it pared some gains to close the trading day 0.22% higher at 16,170 yuan/mt. While lead bucked the downtrend across the nonferrous metals complex on the day, it is likely to fall tonight, given weak performance in its LME counterpart. A buildup of short positions and the downwards expanding five-day moving average will also subdue the contract.

Tin: As shorts aggressively loaded up positions, the most traded SHFE September contract fell to its lower daily limit, losing 5% on the day to close at 135,310 yuan/mt, its lowest since September 2016. Support is seen at 135,000 yuan/mt. Data showed that tin stocks across SHFE-approved warehouses rose for three weeks in a row to 8,392 mt as of June 28, the highest since May 10. LME tin stocks, meanwhile, expanded to 6,390 mt as of July 1, the highest in over three years.