SMM Evening Comments (Aug 20)

SHANGHAI, Aug 20 (SMM) – SHFE nonferrous metals closed mixed on Tuesday. Lead climbed close to 1.7%, aluminium rose 0.4%, and copper gained 0.3%, while tin dipped 0.1% and nickel dropped 2%. Zinc stayed flat.

The ferrous complex also saw mixed performance, with the biggest loss of 2.2% in iron ore. Rebar fell 0.8%, and hot-rolled coil shed 0.5%, while coking coal advanced 0.1%. Coke stayed flat.

Copper: The most active SHFE 1910 contract fluctuated during the day, holding onto most of overnight gains to end its trading day 0.32% higher at 46,620 yuan/mt. Copper prices traded rangebound without a driver from macroeconomic developments, but trade tensions and a global slowdown will exert pressure. Whether SHFE copper could remain above 46,600 yuan/mt will come under scrutiny tonight.

Aluminium: As short-term longs exited, the most traded SHFE 1910 contract eased during the day, paring overnight gains from market talks that an accident affected production at a primary aluminium producer in Xinjiang. It finished the day 0.39% higher at 14,335 yuan/mt. Unexpected supply decline and an anticipated consumption pick-up will keep SHFE aluminium robust in the short term.

Zinc: The most active SHFE 1910 contract traded rangebound during the day, and losses shortly before closing sent it to close flat at 18,610 yuan/mt. Tightness in spot markets is expected to support SHFE zinc, as limited cargoes arrived at social warehouses. Short-covering accounted for the gains in SHFE zinc, reflecting poor morale among longs. SHFE zinc is expected to continue to hover around the 10-day moving average tonight.  

Nickel: After hovering around the daily moving average in a tight range in morning trade, the most traded SHFE 1910 contract dropped below the five-day moving average to the 10-day one in the afternoon, as shorts added their positions. It traded around the 10-day moving average in the rest of trading hours to end the day 1.99% lower at 123,390 yuan/mt. A total of 321 million yuan flowed out of SHFE nickel complex on the day, the most among nonferrous metals. Whether the contract could hold its ground at the 10-day moving average is crucial to watch tonight.

Lead: The 1910 contract became the most active SHFE lead contract. As longs loaded up their positions, the contract climbed to a high of 16,995 yuan/mt, its highest in nearly five months, before it ended 1.65% higher at 16,975 yuan/mt. Open interest for the contract expanded 8,256 lots to 48,582 lots. Today’s sharp gains put SHFE lead on an uptrend, with technical indicators in bullish pattern. The contract is expected to try to surpass the 17,000 yuan/mt level tonight. The 1909 contract advanced 1.53% to close at 16,950 yuan/mt.

Tin: The buildup of short positions knocked the most traded SHFE 2001 contract to an intraday low of 130,100 yuan/mt in early morning trade, before the contract clawed back those losses to close the day a tad lower at 131,260 yuan/mt. Short-covering accelerated the increase in SHFE tin shortly before closing. Support is seen at 130,000 yuan/mt.