SMM Evening Comments (Aug 9)

SHANGHAI, Aug 9 (SMM) – SHFE nonferrous metals closed mostly higher with nickel extending its increases by 5.2%. Copper, aluminium, and lead posted growth between 0.5%-1%, while zinc slid 0.86%. 

The ferrous complex continued to end lower as iron ore settled down 3.77%, with rebar and hot-rolled coil dipping 3.3% and 1.99%, respectively.

Copper: Better-than-expected Chinese consumer inflation data supported copper prices, but overall slackening global growth capped their upward momentum. The most-liquid SHFE October contract pared gains from early trades as it came off from a high of 46,720 yuan/mt to an intraday low of 46,470 yuan/mt, before it finished 0.67% higher on the day at 46,680 yuan/mt. With pressure from the Bollinger middle band and the 40-day moving average, the contract is likely to test support from 46,700 yuan/mt tonight. 

Aluminium: The most-active SHFE September contract found support from loaded-up longs and climbed to an intraday high of 13,955 yuan/mt before noon. It relinquished some gains and finished at 13,910 yuan/mt, up 0.58% on the day. Eased risk aversion sentiment, alumina output controls in Xiaoyi, and expectation of a demand recovery in September-October will keep the contract at highs next week. It may attempt to shrug off pressure from the 14,000 yuan/mt in the coming week. 

Zinc: The most-traded SHFE October contract once fell below support from 18,500 yuan/mt, to an intraday low of 18,430 yuan/mt, dragged by its weaker LME counterpart. It pared some losses and finished at 18,550 yuan/mt, down 0.86% on the day. Smaller-than-expected growth in domestic inventories of refined zinc helped to ease bearish sentiment in the market and may cap any downside room in the contract tonight. 

Nickel: The most-liquid SHFE October contract continued its strong performance as it advanced 5.2% on the day and ended at 126,290 yuan/mt. It climbed above the five-day moving average today, with open interests losing 10,000 lots to 458,000 lots. The movement in longs should be monitored tonight. 

Lead: The most-liquid SHFE September contract traded with pressure from the daily moving average before it fell sharply to a low of 16,605 yuan/mt as longs booked profits and left. It still ended 0.72% higher on the day at 16,785 yuan/mt, again facing pressure from 16,800 yuan/mt. As the five-day moving average expanded upwards, the contract may consolidate at highs tonight. 

Tin: The most-active SHFE September contract lost the increase from overnight as it hovered rangebound and settled down 0.6% on the day, at 135,150 yuan/mt. Support below is expected from the five- and 20- day moving averages, or the 134,500 yuan/mt level, with resistance from 137,000 yuan/mt tonight.