SMM Evening Comments (Jul 9)

SHANGHAI, Jul 9 (SMM) – SHFE nonferrous metals closed mixed on Tuesday, with the biggest loss of 2.1% in lead. Zinc dropped 1.3%, copper fell 0.4% and aluminium shed 0.2% while tin gained 0.2% and nickel rose 0.7%.

The ferrous complex, except for coke, traded higher. Iron ore led the gains with an increase of 4.1%, hot-rolled coil advanced 1.1%, rebar climbed 1% and coking coal expanded 0.9%.

Copper: The most active SHFE September contract slipped shortly after the opening bell, and touched the intraday low of 46,110 yuan/mt before midday. It traded rangebound in afternoon trade and closed the trading day 0.43% lower at 46,190 yuan/mt. Stronger risk-aversion sentiment from recent losses in China stocks, and concerns over demand amid a global slowdown and trade tensions weighed on copper prices. The contract could, either, find little support from technical indicators, with the middle Bollinger band overhead and a further extended MACD green bar. Whether the contract could remain above 46,100 yuan/mt is crucial to watch tonight.

Aluminium: The most traded SHFE August contract fell below the five-day moving average to an intraday low of 13,720 yuan/mt before some long-buying bolstered it to close the trading day 0.18% lower at 13,745 yuan/mt. Weak supply and demand as well as lower power and alumina costs kept SHFE aluminium weak and rangebound.

Zinc: The most traded SHFE September contract weakened during the day, extending overnight losses to end 1.27% lower at 19,005 yuan/mt. Weaker spot premiums, pointing to anemic consumption, are expected to keep the contract under the lower Bollinger band tonight.

Nickel: The most traded SHFE September contract came off from earlier highs to end the trading day 0.67% higher at 100,150 yuan/mt, standing above several moving averages. It is expected to hover around the 100,000 yuan/mt level tonight.

Lead: The most active SHFE August contract dropped in the last trading hour before closing bell, as a decline in prices of battery scrap, a feedstock for secondary lead, drove shorts to load up positions. Open interest for the contract expanded over 2,000 lots in 30 minutes. The contract lost 2.1% to finish the trading day at a more than two-year low of 15,655 yuan/mt. With short- and medium-term moving averages expanding downwards, longs are unlikely to enter the market tonight, growing the possibility of a lower open and weak performance for the contract.

Tin: The most liquid SHFE September contract traded rangebound to close the trading day 0.19% higher at 135,850 yuan/mt.