SMM Evening Comments (Aug 7)

SHANGHAI, Aug 7 (SMM) – SHFE nonferrous metals traded mixed with nickel easing 1.59% from highs. Zinc lost 1.98%, aluminium fell 0.54%, copper slid 0.37%, while lead grew 0.46%, and tin climbed 0.13%. 

The ferrous complex continued to close lower as iron ore settled down 5.37%, with rebar and hot-rolled coil dipping 0.88% and 0.65%, respectively.

Copper: The most-liquid SHFE October contract failed to hold at highs as continued US-China trade fears and macroeconomic pessimism weighed on prices. The contract came off from a high of 46,310 yuan/mt, and settled at an intraday low of 45,960 yuan/mt, down 0.37% on the day. Bearish outlook drove investors to add their short positions, lifting open interests in the October contract by 7,450 lots to 227,000 lots. Without support from moving averages, the contract is expected to struggle above 45,900 yuan/mt tonight. 

Zinc: The most-traded SHFE October contract fell to a fresh low in recent years as aggressively loaded-up shorts sent it down 1.98% on the day to close at 18,765 yuan/mt, after it unsuccessfully tested pressure from the daily moving average. Market pessimism intensified after the contract fell below support from 19,000 yuan/mt and traded below the Bollinger middle band. Open interest grew 25,626 lots to 189,000 lots with shorts taking up the most. With expectations of supply recovery and weak consumption, the contract is expected to test support from the Bollinger lower band tonight. 

Nickel: Loaded-up shorts weighed on the most-liquid SHFE October in the afternoon, as it came off from a high of 119,260 yuan/mt to an intraday low of 116,380 yuan/mt, before ending down 1.59% on the day at 116,500 yuan/mt. This pared gains from a nearly 14-month high reached the previous session. Open interests climbed 19,600 lots to 466,000 lots as shorts entered, triggering an influx of 232 million yuan of capital across all SHFE nickel contracts. The October contract is expected to test support from the five-day moving average, or 116,000 yuan/mt tonight. 

Lead: The most-liquid SHFE September contract gave up some gains from the previous session as it fell in the afternoon and finished at 16,470 yuan/mt, up 0.46% on the day. Steady trends in moving averages may keep the contract at highs tonight. 

Tin: The most-traded SHFE September contract regained losses from earlier trades as it rebounded from a low of 133,800 yuan/mt and ended 0.13% higher on the day at 134,440 yuan/mt. It continued to receive support from the five- and 20- day moving averages. Tonight, the contract will trade with support from a previous low level of 133,000 yuan/mt.