SMM Evening Comments (Jul 29)

SHANGHAI, Jul 29 (SMM) – SHFE nonferrous metals, except for zinc, closed lower on Monday July 29. Lead and nickel fell close to 1%, tin lost 0.46%, copper slid 0.34%, and aluminum dipped 0.2%. 

The ferrous complex also traded mostly lower as rebar eased 1.9%, hot-rolled coil slipped 1.8%, coking coal shed 0.5%, coke shrank 0.3%, while iron ore climbed 0.5%.

Copper: Prices of copper remained under pressure as the US dollar held firm at highs ahead of the Federal Reserve’s decision on interest rate cut this week. The most-liquid SHFE September contract retreated after climbed to an intraday high of 46,970 yuan/mt, losing 0.34% on the day to finish at 46,900 yuan/mt. Open interests decreased by 2,836 lots, mostly longs, while open interests in the back-month October contract grew 13,000 lots. The planned US-China trade talks in Shanghai this week will be closely monitored. Tonight, the September contract may struggle to hold above 47,000 yuan/mt with pressure from the 60-day moving average and a lack of technical support.  

Aluminium: The most-liquid SHFE September contract lacked upward momentum after loaded-up longs buoyed it to a high of 13,900 yuan/mt. Data release of lower social inventories of primary aluminium again pulled up the contract, after it hovering around the 10-day moving average, and settled it at 13,880 yuan/mt, down 0.18% on the day. Support from several moving averages below will keep the contract in a narrow range tonight, but a weaker LME aluminium could pressure on the contract. 

Zinc: Smaller inventories in China’s major consumption areas buoyed the most-traded SHFE September contract, which found support from the Bollinger middle band and gained 1.4% on the day to close at 19,495 yuan/mt. It tested resistance from the 40-day moving average, with the KDJ indicators expanding upwards, pointing to strong upward momentum. It is expected to consolidate around the Bollinger middle band given significant pressure from the 40-day moving average and the 19,500 yuan/mt level. 

Nickel: As shorts added their positions, the most-active SHFE October contract fell below support from the 110,000 level to a low of 108,920 yuan/mt, before it closed 0.99% lower on the day at 109,450 yuan/mt. Open interests grew 6,022 lots to 342,000 lots while transaction volume shrank 256,000 lots. With pressure above from the five-day moving average, the contract may test support from 108,000 yuan/mt tonight. 

Lead: The most-active SHFE September contract continued to pull back from gains made last week, as departing longs lowered the contract from highs around 16,760 yuan/mt, and settled it 0.98% lower on the day at 16,670 yuan/mt. Weak support from the five-day moving average and a falling LME lead may extend the declines tonight. 

Tin: The most-liquid SHFE September contract pared some losses in early trades as it bounced after slid steeply to an intraday low of 133,400 yuan/mt right after opening. Longs covering their positions accounted for the decline. The contract closed 0.46% lower on the day at 134,400 yuan/mt, with open interests down 1,520 lots. It will extend the rangebound trend with support from 134,000 yuan/mt and resistance from 135,600 yuan/mt tonight.