SMM Evening Comments (Aug 12)

SHANGHAI, Aug 12 (SMM) – SHFE nonferrous metals traded mixed with nickel retreating 3.9%. Tin slid 1.7%, while copper and zinc climbed 0.2%, lead rose 0.6%, and aluminium gained 2%. 

The ferrous complex rebounded for the most part as hot-rolled coil advanced 2.2%, coke rose 2.1%, rebar grew 1.6%, while coking coal shed 0.2%, and iron ore extended its declines by 1.1%. 

Copper: Continued pessimism around macroeconomic development depressed upward momentum in copper prices, as the most-liquid SHFE October contract slid to an intraday low of 46,590 yuan/mt before it regained losses to close at 46,750 yuan/mt, up 0.24% on the day. Weak global demand weighed on crude oil prices, and Brexit concerns fanned risk aversion. With pressure from the 20-day moving average and limited technical support below, the contract is expected to struggle above 46,800 yuan/mt tonight. 

Aluminium: Supply worries in Shandong caused by Typhoon Lekima grew confidence in longs, bolstering the most-active SHFE October contract above the Bollinger upper band, to the highest since May 28 at 14,210 yuan/mt. It ended 1.94% higher on the day at 14,185 yuan/mt. The contract is expected to retreat tonight as an SMM survey found that aluminium production in Shandong was barely affected even as local molten aluminium deliveries were disrupted. However, prospects of an upcoming high season and a rally in alumina prices may keep the contract at highs in the short term. 

Zinc: The most-active SHFE October contract hovered around the Bollinger lower band and increased steeply near closing as shorts covered their positions. It settled up 0.16% on the day at 18,675 yuan/mt. The price difference between the October, September contracts narrowed to 60 yuan/mt, indicating eased backwardation. Domestic lower inventories of refined zinc are expected to cap any downside room in zinc prices tonight. 

Nickel: The most-liquid SHFE October contract pared gains from last week as longs booked profits and exited. The contract slipped to an intraday low of 118,720 yuan/mt and found support from a previous high level of 118,500 yuan/mt, ending down 3.91% on the day at 120,980 yuan/mt. Open interests lost 31,000 lots to 427,000 lots, which triggered an outflow of 767 million yuan of capital across all SHFE nickel contracts. The October contract has lost support from the five-day moving average. It may test support from the 120,000 yuan/mt level tonight. 

Lead: The most-active SHFE September contract climbed along with the five-day moving average but faced resistance from the 17,000 yuan/mt level. It came off after rose to highs around 16,995 yuan/mt and finished 0.57% higher on the day at 16,900 yuan/mt. Tonight, it is expected to test resistance from 17,000 yuan/mt.

Tin: The most-liquid SHFE September contract rallied after rising shorts and departing longs dragged it to a low of 131,600 yuan/mt. It pared some losses and closed at 133,250 yuan/mt, down 1.68% on the day. Tonight, support is seen from 132,000 yuan/mt, or 130,000 yuan/mt.