SMM Evening Comments (Jul 24)

SHANGHAI, Jul 24 (SMM) – SHFE nonferrous metals extended their losses for the most part as copper fell 0.53%, aluminium lost 0.07%, tin eased 0.89%, nickel dipped 0.72%, while zinc climbed 0.36%, and lead rose 1.12%. 

The ferrous complex traded lower as iron ore slid 2.66%, with rebar and hot-rolled coil losing 1.27% and 1.49%, respectively. 

Copper: Prices of copper remained under pressure from a high US dollar. Brexit uncertainty posed mounting risks to the European Union economy, and this also weighed on metal prices. The most-liquid SHFE September contract ceased increases at 47,070 yuan/mt and slid to an intraday low of 46,960 yuan/mt, before it lost 0.53% on the day to end at 47,090 yuan/mt. Departing longs lowered open interests in the contract by 3,542 lots to 251,000 lots. Open interests across all SHFE copper contracts grew 2,572 lots to 579,000 lots as capitals flew into back-month contracts. As the KDJ indicators expanded downwards and the MACD red line shortened, the contract is expected to struggle to hold above the 46,900 yuan/mt level tonight. 

Aluminium: The most-active SHFE September contract traded rangebound below all moving averages with a high of 13,805 yuan/mt, ending down 0.07% on the day at 13,790 yuan/mt. Open interests lost 4,336 lots to 237,436 lots as both shorts and longs covered their positions. As the overall fundamentals pattern remained unchanged, the contract is expected to hover between 13,600-14,000 yuan/mt tonight. 

Zinc: The most-active SHFE September contract held on to gains from overnight as it climbed to test pressure from the five-day moving average twice and finished at 19,350 yuan/mt, up 0.36 % on the day. With pressure from the Bollinger middle and expectations of a better-supplied market, the contract may test resistance from the 20-day moving average tonight. 

Nickel: The most-liquid SHFE October contract found support from 111,350 yuan/mt after it weakened in the morning trading sessions. It pared some losses to settle at 112,320 yuan/mt, down 0.72% on the day. Open interests accumulated 26,000 lots to 314,000 lots, triggering an influx of 218 million yuan of capital. Tonight, the contract is expected to test support from the 10-day moving average, or the 111,000 yuan/mt level. 

Lead: Loaded-up longs pulled up the most-traded SHFE September contract to a high of 16,670 yuan/mt near closing, after it hovered around 16,500 yuan/mt in early trades. It gained 1.12% on the day and closed at 16,640 yuan/mt, with open interests up 4,662 lots to 67,592 lots. With support from the 16,350 yuan/mt level and its rallied LME counterpart, the contract is likely to extend the robust trend tonight. 

Tin: The most-liquid SHFE September contract rallied after a buildup of shorts drove it to an intraday low of 130,760 yuan/mt right after opening. It pared some losses and closed at 133,730 yuan/mt, down 0.89% on the day. Tonight, the contract is expected to trade with support from 132,000 yuan/mt.