SMM Evening Comments (Jul 16)

SHANGHAI, Jul 16 (SMM) – SHFE nonferrous metals closed higher across the board on Tuesday as the market continued to digest upbeat industrial output and investment data from China.

Nickel led the increase with a gain of close to 3.9%, lead rose 1.3%, tin advanced close to 1%, aluminium gained 0.4%, copper increased by 0.3% and zinc inched up 0.2%.

The ferrous metals also ticked up. Iron ore climbed 2.4%, rebar rose 1.8%, hot-rolled coil and coking coal expanded 1.5% and coke crept up 1.3%.

Copper: The most active SHFE September contract traded rangebound during the day, holding onto overnight gains to finish the trading day 0.28% higher at 46,910 yuan/mt. Technical indicators continued to show positive signals, with KDJ lines expanding upwards and an extended MACD red bar. Open interest for the contract shrank 5,196 lots on the day to 244,872 lots, as shorts trimmed their positions. The contract is expected to try to stand above 47,100 yuan/mt tonight.

Alumimium: The SHFE August contract rebounded to a high of 13,905 yuan/mt before it erased some gains to end the trading day 0.43% higher at 13,885 yuan/mt. While cost support waned from lower alumina prices, the absence of a substantial pick-up in social inventories, a strong LME counterpart and an anticipated consumption recovery in September buoyed SHFE aluminium.

Zinc: With support from the five-day moving average, the most traded SHFE September contract trimmed earlier gains to close 0.18% higher at 19,250 yuan/mt, registering a two-day winning streak. An MACD golden cross signals a potential uptrend in SHFE zinc. The buildup of long positions primarily accounted for today’s gains, as falling social inventories domestically fuelled confidence among longs. Resistance from the 20-day moving average will come under scrutiny tonight.

Nickel: A load-up of longs positions speeded up gains in the SHFE September contract in afternoon trade, to a nearly one-year high of 109,890 yuan/mt before the contract ended the trading day 3.91% higher at 109,640 yuan/mt. Whether the contract could extend its increase and stand above the 110,000 yuan/mt level is key to watch tonight.

Lead: As longs loaded up their positions, the most active SHFE September contract climbed to a two-week high of 16,290 yuan/mt in afternoon trade, extending overnight gains to close 1.31% higher at 16,275 yuan/mt. The contract shrugged off resistance from the 60-day moving average to near the upper Bollinger band, but resistance is strong at the 16,300 yuan/mt level. Whether the contract could break above 16,300 yuan/mt is crucial to watch tonight.

Tin: As shorts covered their positions, the most traded SHFE September contract rose to a high of 135,390 yuan/mt, recovering from overnight losses to close 0.95% higher at 134,890 yuan/mt. Resistance is seen from a previous high of 137,500 yuan/mt.