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SMM Evening Comments (Jul 31)

iconJul 31, 2019 17:19
SHFE nonferrous metals ended mostly lower amid trade uncertainties

SHANGHAI, Jul 31 (SMM) – SHFE nonferrous metals ended mostly lower amid trade uncertainties between China and the US. Lead lost 1.3%, zinc slid 1.2%, copper fell 1.1%, tin eased 0.4%, aluminium shed 0.1%, while nickel extended its increases and climbed 0.3%. 

The ferrous complex traded mixed as coke slipped 1%, rebar and iron ore lost 0.1%, while hot-rolled coil grew 0.2%, and coking coal advanced 0.4%. 

Copper: US-China trade uncertainties grew market caution, as departing long positions dragged the most-active SHFE September contract to close at lows of 46,720 yuan/mt, down 1.06% on the day. Open interests lost 1,472 lots to 230,000 lots, while open interests in the October contract climbed 23,000 lots to 173,000 lots with surging shorts. This caused an influx of 316 million yuan of capital into all SHFE copper contracts today. With pressure from the five-day moving average and shortening MACD indicators, the September contract may track its LME counterpart and test support from the 46,700 yuan/mt level tonight. 

Zinc: The most-liquid SHFE September contract found support from the 10-day moving average and rebounded to around 19,500 yuan/mt at noon, but limited upward momentum again drove it to a low of 19,370 yuan/mt, before it lost 1.17% on the day to close at 19,385 yuan/mt. Open interests decreased 18,832 lots to 235,000 lots while open interests across October and November contracts expanded a combined 12,800 lots. Tonight, support from the Bollinger middle band for the September contract should be monitored. 

Nickel: The most-liquid SHFE October contract lost nearly all the gains from trades before noon as longs booked profits and left in the afternoon, lowering the contract to the 112,000 yuan/mt level before it ended at 112,260 yuan/mt, up 0.32% on the day. It remained above the five-day moving average, and may hover between the five- and 10- day moving averages tonight. 

Lead: An underperformed LME lead prompted longs to exit, which weighed on the most-traded SHFE September contract to 16,560 yuan/mt around noon after it opened at 16,610 yuan/mt. Weakening base metals in the afternoon extended declines in the contract, which fell 1.29% on the day to finish at 16,505 yuan/mt. As the five-day moving average moved downwards and LME lead remained weak, the contract may continue to trend downwards tonight, but support will linger at 16,300 yuan/mt. 

Tin:  As investors cut their shorts and loaded-up longs, the most-liquid SHFE September contract rebounded after hovered at lows around 133,530 yuan/mt in early trades. It finished the trading day at 133,840 yuan/mt, down 0.42% on the day. We see it extending the rangebound trend with support from 133,500 yuan/mt and resistance from 135,600 yuan/mt tonight. 

Evening comments
Futures movement

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