SMM Evening Comments (Sep 27)

SHANGHAI, Sep 27 (SMM) – SHFE nonferrous metals closed mixed on Friday September 27, as nickel climbed 0.7%, zinc grew 0.5%, lead advanced 0.1%, while copper shed 0.4%, aluminium and tin lost 0.7%. 

The ferrous composite mostly fell as coking coal dropped 1.5%, hot-rolled coil dipped 1.4%, rebar fell 1.1%, coke slid 0.9%, while stainless steel gained 0.1%, and iron ore went up 1.6%. 

Copper: The most-traded SHFE November contract recovered from overnight losses as expectations of peak demand season in September-October remained supportive of metal prices. The contract ended at an intraday high of 46,920 yuan/mt, down 0.42% on the day. Weak global growth and trade uncertainty will continue to cap any upsides in near-term prices. With pressure above from the 10-day moving average and limited support from the Bollinger middle band, the contract is seen testing support from 46,900 yuan/mt tonight. 

Aluminium: The most-active SHFE November contract came off after climbed as intensified risk aversion before holiday drove longs to exit. It finished the trading day some 0.7% lower at 13,975 yuan/mt, with open interest down 15,902 lots to 200,048 lots. Capitals will continue to flow out and keep the contract rangebound tonight. 

Zinc: The most-active SHFE November contract ended its six straight sessions of decline as lower social inventories of refined zinc triggered the exit of shorts and buoyed the contract to a high of 18,795 yuan/mt, before it ended up 0.54% at 18,745 yuan/mt. Open interest shrank 25,484 lots to 182,000 lots today. We expect the contract to track its LME counterpart tonight. 

Nickel: The most-traded SHFE November contract shrugged off pressure from the daily moving average in the afternoon session, as longs loaded up their positions and bolstered prices to a high of 138,050 yuan/mt, before the contract ended up 0.73% at 137,970 yuan/mt. The K-indicator moved above the junction of the five- and 10- day moving averages, or the 137,500 yuan/mt level. Support from 137,500 yuan/mt will be monitored tonight. 

Lead: Concerns about macroeconomic development uncertainty drove shorts to cover their positions, which bolstered the most-liquid SHFE November contract to a high of 16,990 yuan/mt and ended it at 16,980 yuan/mt, up 0.12% on the day. Given strong support from the 40-day moving average and signs of slower declines in LME lead, the contract is likely to climb above the 17,000 yuan/mt level tonight. 

Tin: The most-liquid SHFE January 2020 contract hovered weekly after the overnight drop, ending down 0.72% at 135,590 yuan/mt, with an intraday low of 135,050 yuan/mt. Support will remain from 135,000 yuan/mt tonight.