SMM Evening Comments (Jul 22)

SHANGHAI, Jul 22 (SMM) – SHFE nonferrous metals fell across the board with nickel leading the losses and retreating 3.77% after strong gains of two weeks. Copper slid 0.21%, aluminium lost 0.47%, zinc fell 1.46%, lead dipped 1.05%, and tin declined 3.77%. 

The ferrous complex also traded lower as iron ore eased 1.61%, rebar slid 0.55%, and hot-rolled coil went down 0.16%. 

Copper: The most-active SHFE September contract trended downwards and ended 0.21% lower on the day at 47,410 yuan/mt, after it slid to an intraday low of 47,380 yuan/mt. Bullish sentiment eased as investors reduced expectations of an aggressive interest rate cut by the Federal Reserve.  This drove longs to cover their positions, lowering open interests in SHFE copper contracts by 48,000 lots. Currently below the Bollinger upper band, the contract is expected to test support from 47,400 yuan/mt tonight. 

Aluminium: The most-traded SHFE September contract rebounded to around the 20-day moving average at noon, but loaded-up shorts and exiting longs capped its increase at 13,890 yuan/mt, settling it 0.47% lower on the day at 13,860 yuan/mt. Slow consumption grew domestic social inventories of primary aluminium as expected. This, together with its retreated LME counterpart, will keep the contract rangebound tonight. 

Zinc: Higher stocks of refined zinc in three major consumption areas of China prompted shorts to enter the most-liquid SHFE September contract, which dipped to a low of 19,190 yuan/mt and finished at 19,235 yuan/mt, down 1.46% on the day. The contract fell back to between the 20- and 40-day moving averages. Tonight, weaker support from fundamentals will keep the contract trading with pressure from the Bollinger middle band.  

Nickel: The most-liquid SHFE October contract ended its eight consecutive trading days of increase and shed 3.74% on the day to end at 113,490 yuan/mt, as speculative purchasing started to lose steam. Some 515 million yuan of capital flew out of all SHFE nickel contracts, topping the base metals. Falling below support from the five-day moving average and the Bollinger upper band, the contract is expected to struggle above the 112,000 yuan/mt level tonight. 

Lead: Departing longs and a falling LME lead depressed upward momentum in the most-traded SHFE September contract, which came off from highs around 16,600 yuan/mt to an intraday low of 16,355 yuan/mt, ending 1.05% lower at 16,430 yuan/mt. As short- to medium-term moving averages continued to expand upwards, the contract may consolidate around current levels tonight.  

Tin: The most-active SHFE September contract continued to trade rangebound as it lost 0.67% on the day and finished at 134,210 yuan/mt, after it rallied from a low of 133,580 yuan/mt to a high of 135,400 yuan/mt. Currently around the five- and 10- day moving averages, the contract is expected to test support from 132,000 yuan/mt with resistance from 137,500 yuan/mt tonight.