SMM Evening Comments (Sep 4)

SHANGHAI, Sep 4 (SMM) – SHFE nonferrous metals, except for lead, closed higher on Wednesday. Tin saw the biggest gain of 3.1%, nickel climbed 1.3%, copper and zinc advanced 0.4%, and aluminium increased by 0.2%.

The ferrous complex ticked up across the board. Iron ore rose for a fourth straight day and gained 1.4% on the day. Coke crept up 1.2%, rebar and coking coal popped up about 0.7%, and hot-rolled coil expanded 0.5%.

Copper: The most active SHFE 1910 contract climbed during the day, further away from two-year lows it touched overnight, as gains in China stocks and an anticipated consumption pick-up in a traditional high season in September-October promoted longs to build positions. SHFE copper finished the day 0.43% higher at an intraday high of 46,620 yuan/mt, standing above several moving averages. Stronger expectations of Fed interest rate cuts, on downbeat US manufacturing data, also helped bolster copper prices. Whether SHFE copper could continue to rise and stand above 46,700 yuan/mt is crucial to watch tonight.

Aluminium: The most traded SHFE 1910 contract rose to a two-week high of 14,400 yuan/mt in early morning trade, before it relinquished some gains to end the day 0.21% higher at 14,355 yuan/mt.

Zinc: The most active SHFE 1910 contract followed its LME counterpart higher in European trading hours, after it wavered around its opening price earlier in the day. It closed the day 0.4% higher at 18,785 yuan/mt, with the spread to the 1909 contract narrowing to zero. SHFE zinc turned more sensitive to the London market, as macro uncertainty intensified. Support from the fundamentals is limited, as falling spot premiums showed weak demand. Resistance from the middle Bollinger band will come under scrutiny tonight.   

Nickel: The most traded SHFE 1911 contract gained 1.32% on the day to end at 146,850 yuan/mt. This kept it above the upper Bollinger band and moving averages. About 226 million yuan exited from the contract on the day. Pressure from 148,000 yuan/mt level will come under scrutiny tonight.

Lead: The most active SHFE 1910 contract hovered around the daily moving average in a range of 100 yuan/mt during the day, and partially recovered from overnight losses to end 0.55% lower at 17,280 yuan/mt. This forced the five-day moving average to reverse its course to expand downwards. SHFE lead is unlikely to simply rise tonight, but downside room will be limited by support at the 10-day moving average and its strong LME counterpart.

Tin: The load-up of long positions helped the most traded SHFE 2001 contract refresh its two-month high at 141,610 yuan/mt, before the contract eased to finish the day 3.14% higher at 140,110 yuan/mt. Whether SHFE tin could remain above 140,000 yuan/mt and extend its gains is crucial to watch in the near term.