SMM Evening Comments (Sep 26)

SHANGHAI, Sep 26 (SMM) – SHFE nonferrous metals ended mixed on Thursday September 26, as aluminium fell 0.7%, tin shed 0.2%, zinc lost 0.1%, while lead grew 0.1%, nickel and copper climbed 0.2%. 

The ferrous complex also traded on a mixed note, as hot-rolled coil slid 1.7%, rebar fell 1.4%, coke dropped 0.1%, while coking coal rose 0.5%, stainless steel advanced 1%, and iron ore went up 2.2%.

Copper: The most-liquid SHFE November contract relinquished gains from overnight as a strong US dollar and lower oil prices weighed prices from an intraday high of 47,230 yuan/mt in early trades. The contract finished the trading day 0.15% higher at 47,120 yuan/mt, with open interest down 7,610 lots to 201,000 lots as shorts exited. The SHFE October and November contracts returned to the contango structure, with a price spread of 10 yuan/mt at closing. With pressure above from the 10-day moving average and bearish technical indicators, the November contract is seen testing support from 47,100 yuan/mt tonight. 

Aluminium: As longs continued to exit the market, the most-traded SHFE November contract fell below the 60-day moving average and finished at an intraday low of 14,040 yuan/mt, down 0.74% on the day. Inventories of primary aluminium across China’s social warehouses extended declines, and this kept shorts from significantly loading-up their positions. Continued departing longs may see the contract testing support from 14,000 yuan/mt tonight. 

Zinc: Downbeat outlook on macroeconomic development drove the most-active SHFE November contract lower for the sixth straight session, as the contract closed down 0.13% at 18,615 yuan/mt. Signs of slower downstream consumption before the holiday and pressure above from the five- and 40- day moving averages are likely to keep the contract weak tonight. 

Nickel: The most-liquid SHFE November contract lost part of the overnight gains and hovered within a narrow band after moved lower to the 136,500 yuan/mt level. With pressure above from the five- and 10- day moving averages, it closed up 0.19% at 136,580 yuan/mt. Support below from the Bollinger middle band, or 136,000 yuan/mt, will be monitored tonight. 

Lead: The most-traded SHFE November contract pared overnight gains as investors cut their long positions on intensified risk aversion pre-holiday. A traditional brisk season for lead consumption drew close to an end, and this also depressed confidence in longs. The contract slipped to an intraday low of 16,850 yuan/mt and ended up 0.06% at 16,855 yuan/mt. Limited upward momentum is expected tonight even as LME lead strengthened. 

Tin: As longs booked profits after an initial buildup, the most-liquid SHFE January 2020 contract came off from a high of 137,560 yuan/mt struck in early trades, and closed down 0.21% at 136,110 yuan/mt. Support below from 136,000 yuan/mt will be tested tonight.