SMM Evening Comments (Sep 3)

SHANGHAI, Sep 3 (SMM) – SHFE nonferrous metals closed mostly higher on Tuesday. Nickel remained the best performer, with a gain of more than 7%. Tin rose 1.3%, lead advanced 0.6% and aluminium climbed 0.1%, while zinc dipped 0.03% and copper fell 0.7%.

The ferrous complex traded mixed. Iron ore rose for a third straight day and gained 3.2%, hot-rolled coil ticked 1.2% higher, and rebar increased by 1%, while coking coal edged down 0.04% and coke dropped 0.9%.

Copper: The most active SHFE 1910 contract dipped in the last trading hour before closing, after hovering around 46,450 yuan/mt in a tight range for much of the day. It finished the trading day 0.66% lower at 46,370 yuan/mt. Economic growth slowdown concerns, a stronger US dollar and Brexit uncertainty weighed on copper prices. SHFE copper faces pressure from the middle Bollinger band. Whether the contract could remain above 46,300 yuan/mt will come under scrutiny tonight.

Aluminium: The most traded SHFE 1910 contract gave back earlier gains to close the trading day 0.14% higher at 14,310 yuan/mt, with open interest shrinking 14,890 lots to 284,378 lots. News of capacity recovery and strong performance seen in some other metals sidelined longs, while improving consumption deterred shorts from making moves. SHFE aluminium is expected to remain firm and rangebound tonight.

Zinc: Faced with resistance from the five-day moving average, the most active SHFE 1910 contract followed its LME counterpart lower in the last trading hour before closing. It ended the day a tad lower at 18,680 yuan/mt. Its KDJ indicators are flattish, suggesting a lack of direction among investors. The spread between the 1909 and 1910 contract widened from 10-20 yuan/mt in early morning to 85 yuan/mt, caused by supply tightness in spot markets. SHFE zinc is likely to stage a lower open tonight, tracking losses in its LME counterpart.

Nickel: As longs aggressively loaded up positions, the most traded SHFE 1911 contract refreshed its record high at 149,190 yuan/mt in morning trade, before it erased some gains to end 7.13% higher at 146,720 yuan/mt. Over 1.7 billion yuan exited from the SHFE nickel complex on the day. The contract has convincingly stood above the upper Bollinger band and moving averages. It is crucial to watch whether it could surpass 150,000 yuan/mt tonight.

Lead: As longs added and shorts trimmed their positions, the most active SHFE climbed to a six-month high of 17,480 yuan/mt, before it eased to close the day 0.55% higher at 17,360 yuan/mt. Despite positive technical indicators, a weak LME lead will likely weigh on SHFE lead, which is expected to continue to hover at highs tonight.

Tin: The buildup of long positions bolstered the most traded SHFE 2001 contract to a two-month high of 138,800 yuan/mt, before the contract relinquished some gains to end 1.26% higher at 135,290 yuan/mt. Resistance is seen at 139,000 yuan/mt.