SMM Evening Comments (Aug 21)

SHANGHAI, Aug 21 (SMM) – Most SHFE nonferrous metals closed lower on Wednesday. Zinc dropped 0.9%, copper fell close to 0.5%, aluminium and nickel shed 0.3%, while tin gained 0.7% and lead advanced 1.6%.

The ferrous complex traded lower across the board, with the biggest loss of 4.3% in iron ore. Rebar and coke declined 1.1%, coking coal slipped 1%, and hot-rolled coil fell 0.2%.

Copper: The most active SHFE 1910 contract hovered in a tight range during the day, and a moderate rise shortly before closing helped it pare some overnight losses to close the trading day 0.45% lower at 46,430 yuan/mt. Copper prices remained at lows as weak economic data and trade uncertainty grew concerns about the state of the economy. Technical indicators also painted a bleak picture. Whether SHFE copper could remain above 46,300 yuan/mt will come under scrutiny tonight.

Aluminium: The most traded SHFE 1910 contract clawed back some losses from overnight trade to finish its trading day 0.31% lower at 14,335 yuan/mt. Recent developments on the supply side will keep SHFE aluminium at highs in the short term, while upward momentum is expected as the low consumption season draws to an end.

Zinc: The most active SHFE 1910 contract weakened to its lowest in more than a week, at 18,390 yuan/mt, before it clawed back some losses to end 0.86% lower at 18,470 yuan/mt. Its KDJ lines expanded downwards, suggesting a downturn in SHFE zinc, on the backdrop of weak fundamentals. Despite recent improvement in demand, trade uncertainty kept downstream buyers cautious. Shorts added their positions on the day, hampering upward momentum in SHFE zinc. The contract is expected to trade around the five-day moving average tonight.

Nickel: The most traded SHFE 1910 contract fluctuated under the pressure from the daily moving average during the day, closing 0.28% lower at 123,840 yuan/mt. Traders moved their positions to forward contracts, with open interest for 1909 and 1910 contracts shrinking 13,000 lots, while that for 1911-2002 contracts expanding 18,000 lots. Whether the 1910 contract could hold above 123,000 yuan/mt is crucial to watch tonight.

Lead: As longs flocked to the market, the most active SHFE 1910 contract climbed during the day, extending overnight gains to end 1.6% higher at 17,120 yuan/mt. Recent days’ solid gains, together with greater trading volumes, helped SHFE lead firmly stand above 17,000 yuan/mt. This, combined with sharp increases in its LME counterpart, will fuel the SHFE lead rally tonight.

Tin: As shorts exited and longs added their positions, the most traded SHFE 2001 contract rapidly rose to the intraday high of 133,500 yuan/mt shortly after this morning’s opening bell. In the rest of trading hours of the day, the contract relinquished those gains and closed 0.7% higher at 131,660 yuan/mt. Support is seen at 130,000 yuan/mt, while resistance is from the 10-day moving average as high as 133,500 yuan/mt.