SMM Evening Comments (Jul 3)

SHANGHAI, Jul 3 (SMM) – SHFE nonferrous metals, except for zinc, closed lower on Wednesday. Tin remained the worst performer, with a loss of 3.8%. Lead and copper dropped more than 1%, nickel shed 0.9% and aluminium fell 0.2%.

The ferrous complex, except for iron ore, ticked down. Coking coal declined 1.9%, rebar slid 0.8%, hot-rolled coil lost 0.5% and coke dipped 0.05%.

Copper: The most active SHFE August contract slipped during the day, extending overnight losses to finish the trading day 1.03% lower at 46,250 yuan/mt. Two consecutive days of declines sent it further away from the middle Bollinger and moving averages. Concerns about global economic growth, a low consumption season and rising supply pressure weighed on copper prices. With limited support from technical indicators, strength at the 46,000 yuan/mt level will come under scrutiny tonight.

Aluminium: The most traded SHFE August contract recovered some ground to close the trading day 0.22% lower at 13,650 yuan/mt as longs added their positions after prices fell to a low of 13,620 yuan/mt. Market focus turned to expectations of weaker consumption in the third quarter. The contract is expected to continue to hover in a tight range tonight, and to maintain such a pattern if SMM data slated for release on Thursday show social inventories of primary aluminium ingots maintain their destocking pace.

Zinc: Resistance from the 10-day moving average forced the most active SHFE August contract to relinquish earlier gains to end 0.15% higher at 19,650 yuan/mt. Expectations for higher inventories and weak consumption might limit upward momentum in SHFE zinc. Resistance from the five-day moving average is under scrutiny tonight.

Nickel: The most traded SHFE August contract traded rangebound above the 97,000 yuan/mt level during the day, failing to recover from overnight losses and ending 0.93% lower at 97,270 yuan/mt. SHFE nickel saw a smaller decline today after two consecutive days of sharp losses. Whether it will remain rangebound and hold onto its ground at 97,000 yuan/mt is crucial tonight.

Lead: As longs trimmed and short added their positions, the most active SHFE August contract weakened during the day, adding to overnight losses to close the trading day 1.05% lower at 16,015 yuan/mt. Whether the contract can remain above the 16,000 yuan/mt level is key to watch tonight.

Tin: Some short-covering and long-buying bolstered the most traded SHFE September contract during the day, keeping some distance from a fresh three-year low of 127,780 yuan/mt touched overnight. It finished the trading day 3.8% lower at 132,500 yuan/mt. Support is seen at 131,500 yuan/mt.