SMM Evening Comments (Oct 9)

SHANGHAI, Oct 9 (SMM) – SHFE nonferrous metals closed mostly lower on Wednesday October 9. Lead relinquished previous gains and fell 1.69%, copper shed 0.6%, aluminium dropped 0.39%, zinc eased 0.24%, while nickel went flat, and tin gained 1.81%. 

The ferrous composite extended their declines for the most part as rebar slipped 0.41%, iron ore lost 2.89%, hot-rolled coil dipped 0.23%, coke fell 1.25%, while stainless steel advanced 0.19%. 

Copper: Prices of copper hovered at lows as weak global economic growth and a stronger US dollar weighed on base metals and as the market awaited clues on US monetary policies from the Federal Reserve’s minutes. The most-active SHFE December contract ended down 0.6% at 46,640 yuan/mt, with an intraday high of 46,730 yuan/mt, extending declines from the previous session. It lost support from all moving averages and may track its LME counterpart to test support from 46,500 yuan/mt tonight.  

Aluminium: The most-liquid SHFE November contract fell for the second straight day as loaded-up bearish positions dragged it below 14,000 yuan/mt and exiting longs depressed it to an intraday low of 13,920 yuan/mt, before it ended down 0.39% at 13,925 yuan/mt. Open interest shrank 2,952 lots to 184,572 lots. Tonight, the contract is expected to stay rangebound with further downside room. 

Zinc: A buildup of longs and leaving shorts pulled up the most-liquid SHFE November contract after it opened at 18,720 yuan/mt, but pressure from the 10- and 40- day moving averages prevented it from exceeding 18,765 yuan/mt. It finished the trading day 0.24% lower at 18,660 yuan/mt. Open interest across the December and January 2020 contracts grew a combined 10,000 lots, mostly short positions, indicating intensified backwardation structure. Fundamentals will remain supportive of zinc prices tonight. 

Nickel: The most-active SHFE December contract traded with pressure from the five-day moving average, or the 137,000 yuan/mt level, ending flat at 136,740 yuan/mt. It saw an inflow of capital of 745 million yuan today, while capital of some 2.26 billion yuan flew out of all SHFE nickel contracts. The December contract may continue to trade within a narrow band around 137,000 yuan/mt tonight. 

Lead: With continued pressure from shorts, the most-traded SHFE November contract extended declines from overnight and fell to the rangebound level pre-holiday, ending down 1.69% at 16,915 yuan/mt. It may move lower and test support from the 60-day moving average tonight as its LME counterpart also weakened. 

Tin: As longs aggressively loaded up their positions, the most-liquid SHFE January 2020 contract climbed to an intraday high of 137,000 yuan/mt and ended the trading day 1.81% higher at 136,930 yuan/mt. Support is expected at 135,000 yuan/mt with resistance at 138,000 yuan/mt tonight.