SMM Evening Comments (Jul 8)

SHANGHAI, Jul 8 (SMM) – SHFE nonferrous metals closed mixed on Monday. Zinc dropped 0.9%, lead fell 0.6%, aluminium shed close to 0.3% and copper dipped 0.06%, while tin advanced over 2% and nickel rose 2.3%.

The ferrous complex also saw mixed performance. Coke declined 1.1%, rebar slipped close to 0.6% and hot-rolled coil lost 0.2%, while coking coal gained 0.4% and iron ore rallied 1.9%.

Copper: The most active SHFE September contract pared earlier gains to fall to a low of 46,290 yuan/mt before it recovered some ground to close lower at 46,390 yuan/mt. Lingering concerns about demand amid a global slowdown weighed on copper prices. SHFE copper sees limited support from technical indicators, with the five-day moving average overhead and an extended MACD green bar. Strength at the 46,000 yuan level will come under scrutiny tonight.

Aluminium: As shorts added their positions, the most traded SHFE August contract came off from earlier highs to an intraday low of 13,735 yuan/mt, near the five-day moving average, before it recovered some ground to close 0.25% lower at 13,770 yuan/mt. SMM data showed that social inventories of primary aluminium ingots in China shrank by a smaller margin of 6,000 mt over the weekend, with sales especially poor in the north, which cemented the expectations of weaker consumption in the third quarter. Meanwhile, aluminium producers further held off on the resumption of closed capacity. Those factors kept SHFE aluminium rangebound.

Zinc: A load-up of short positions depressed the most active SHFE September contract to a nearly six-month low of 19,085 yuan/mt before strength at the lower Bollinger band helped the contract recover some ground to close 0.93% lower at 19,135 yuan/mt. This marked a third straight trading day of decline. SMM data showed a moderate decline in social inventories of refined zinc across Shanghai, Tianjin and Guangdong over the weekend, which grew the expectations of a rebound in stocks. With weak fundamentals, the contract is expected to continue to trade weakly under pressure from the five-day moving average tonight.

Nickel: The most traded SHFE September contract extended Friday night’s gains to finish the trading day 2.29% higher at 100,500 yuan/mt. Whether the contract could stand firmly above the 10-day moving average is crucial to watch tonight.

Lead: The most active SHFE August contract dropped in afternoon trade, extending Friday night losses to end 0.59% lower at 15,960 yuan/mt. As shorts aggressively added their positions, the contract fell for two consecutive trading days, to below the five-day moving average. SHFE lead is expected to test support at 15,800 yuan/mt tonight.

Tin: As shorts aggressively covered their positions, the most traded SHFE September contract rapidly rose to an intraday high of 136,980 yuan/mt in early morning trade before it traded rangebound in the rest of trading hours to end 2.03% higher at 136,580 yuan/mt. Resistance is seen at 138,000 yuan/mt, with next resistance at the 10-day moving average as high as 139,000 yuan/mt.