SMM Evening Comments (Sep 10)

SHANGHAI, Sep 10 (SMM) – SHFE nonferrous metals closed mostly higher on Tuesday. Nickel was the best performer, with a gain of 2.7%. Tin rose 0.3%, zinc inched up 0.2% and copper nudged up 0.06%, while lead fell 0.3% and aluminium shed close to 0.4%.

The ferrous complex broadly rose for a second day in a row. Iron ore saw the biggest gain of 3.3%, hot-rolled coil advanced 1.2%, coke climbed 1%, rebar rose 0.9%, and coking coal gained 0.4%.

Copper: The most active SHFE 1911 contract recovered from overnight losses to an intraday high of 47,500 yuan/mt in early morning trade, after China reported robust consumer price inflation for August. It later fluctuated to end the trading day marginally higher at 47,430 yuan/mt. Risk aversion has somewhat eased, with CMX gold breaking below the key $1,500 support. This is likely to shore up copper prices in the short term. With positive technical indicators, SHFE copper is expected to test the 47,600 yuan/mt level tonight.

Aluminium: The most traded SHFE 1911 contract slightly weakened in seesaw trade, as traders weighed consumption pick-up against supply recovery. It lost 0.35% on the day to end at 14,355 yuan/mt. An increasingly greater number of primary aluminium smelters have decided to resume their capacity after SHFE aluminium prices recovered from a low season. This dimmed market outlook for after November. For SHFE aluminium to move further higher, it needs to see encouraging consumption data.

Zinc: The influx of longs bolstered the most active SHFE contract to an intraday high of 19,120 yuan/mt in afternoon trade, before resistance from the upper Bollinger band forced it to relinquish some of those gains to end 0.16% higher at 19,025 yuan/mt. The buildup of short positions accounted for the majority of open interest expansion on the day, as expectations that greater supply will grow inventories and a pull-back to the 19,000 yuan/mt level bolstered morale among shorts. Support at the 40-day moving average will come under scrutiny tonight.

Nickel: The most traded SHFE 1911 contract fluctuated during the day, and saw the range widen in the final trading hour. Thanks to overnight gains, it finished the trading day 2.7% higher at 144,090 yuan/mt. About 293 million yuan flowed into the SHFE nickel complex on the day. Whether SHFE nickel could remain above the five-day moving average will come under scrutiny tonight.

Lead: Tracking gains in its LME counterpart, the most active SHFE 1910 contract clawed back overnight losses to the 17,460 yuan/mt level in morning trade, before it eased to end 0.31% lower at 17,415 yuan/mt, as longs took profits. SHFE lead remained rangebound above moving averages, with short-term ones flattening. It is expected to continue to move above the robust five- and 10-day moving averages support tonight.

Tin: The most traded SHFE 2001 contract recovered from earlier losses to close the day 0.33% higher at 140,770 yuan/mt. SHFE tin currently stands close to the five-day moving average, with support at 138,000 yuan/mt.