SMM Evening Comments (Aug 5)

SHANGHAI, Aug 5 (SMM) – SHFE nonferrous metals traded mixed and a weakened Chinese yuan helped to ease losses of some metals. Nickel climbed 3.64% on fears over the Indonesian export ban. Zinc gained 0.78%, aluminium advanced 0.54%, while copper slid 0.82%, tin lost 0.8%, and lead shed 0.24%. 
 
The ferrous complex traded lower as iron ore fell the maximum 6%, with rebar and hot-rolled coil dipping some 1.4%. 

Copper: A lack of confidence in the market amid escalated US-China trade conflict continued to pressure copper prices, as the most-liquid SHFE September contract closed 0.82% lower on the day at 46,060 yuan/mt, after it regained part of the losses from last Friday night. The yuan fell beyond the key 7 per dollar level for the first time in more than a decade, as China attempted to offset negative impact from the trade war with the US. The September contract has lost support from all moving averages. With the MACD green line lengthening and the KDJ indicators expanding downwards, the contract may struggle above the 45,800 yuan/mt level tonight. 

Aluminium: Prices of aluminium also received a boost from rekindled concerns about Indonesia’s export ban on raw ore, as Indonesia is the third-largest supplier of bauxite for China. The most-traded SHFE September contract rebounded from a low of 13,765 yuan/mt to an intraday high of 13,905 yuan/mt, before closing 0.54% higher on the day at 13,880 yuan/mt. Fundamentals are expected to keep prices rangebound tonight. 

Zinc: A lower Chinese yuan grew momentum in zinc prices today, with the most-liquid SHFE September contract climbing above the 20-day moving average to a high of 19,375 yuan/mt, ending the trading day 0.78% higher at 19,365 yuan/mt. Open interests shrank 15,012 lots to 182,000 lots as shorts covered their positions. Given limited fundamental support amid higher social inventories, the contract may test resistance from the Bollinger middle band tonight. 

Nickel: The most-active SHFE October contract rose to the highest since July 2018, at 119,360 yuan/mt, and ended up 3.64% at 118,010 yuan/mt, bolstered by renewed concerns over Indonesia export ban. Loaded-up longs triggered an influx of 1.12 billion yuan of capital into all SHFE nickel contracts, topping base metals. Currently above the five-day moving average, the contract may try to stand above the 120,000 yuan/mt level tonight. 

Lead: The most-liquid SHFE September contract climbed sharply to a high of 16,380 yuan/mt amid a broad price rally in the afternoon, but pressure from the 20-day moving average stemmed the increase and settled the contract at 16,325 yuan/mt, down 0.24% on the day. Higher social inventories of lead ingot grew concerns about the recovery of downstream demand. Tonight, the contract may continue to test support from 16,300 yuan/mt. Support will remain from the 40-day moving average.

Tin: Departing longs extended losses in the most-active SHFE September contract, which dipped to an intraday low of 132,940 yuan/mt, and finished the trading day 0.8% lower at 133,290 yuan/mt. Support is expected from the 133,000 yuan/mt level tonight.