SMM Evening Comments (Oct 11)

SHANGHAI, Oct 11 (SMM) – SHFE nonferrous metals ended mixed on Friday October 11. Copper advanced 0.67%, zinc gained 1.01%, nickel rose 0.48%, while aluminium eased 0.79%, lead fell 0.09%, and tin dropped 0.31%. 

The ferrous composite also traded on a mixed note as iron ore extended increase by 1.86%, stainless steel rose 0.35%, coke climbed 0.49%, while rebar shed 0.15%, and hot-rolled coil lost 1%. 

Copper: The most-liquid SHFE December contract found support from improved market confidence about US-China trade, and held steady at the 47,000 yuan/mt level. It ended up 0.67% on the day at 46,910 yuan/mt, with an intraday high of 47,060 yuan/mt. Slightly bullish signals from technical indicators may see the contract testing support from 46,900 yuan/mt tonight. 

Aluminium: Aggressively loaded-up shorts dragged the most-traded SHFE November contract below the five-day moving average, to an intraday low of 13,600 yuan/mt, before it closed at 13,790 yuan/mt, down 0.79% on the day. The most-active contract is likely to shift to the December contract tonight. While fundamentals weakened, trade uncertainties may keep bearish positions on the sideline. This, together with a continued downtrend in social inventories, is expected to keep the contract between 13,650-13,950 yuan/mt next week. 

Zinc: The SHFE December contract became the most-traded contract today, which closed 1.01% higher on the day at 18,960 yuan/mt, bolstered by lower social inventories of refined zinc over the holiday and rallied macroeconomic sentiment. However, strong resistance from 19,000 yuan/mt sustained and may see the contract testing support from moving averages below tonight. 

Nickel: The most-liquid SHFE December contract stayed rangebound at 137,000 yuan/mt, as it recovered after slipping to an intraday low of 135,130 yuan/mt, and ended up 0.48% at 136,900 yuan/mt. The trend around the 137,000 yuan/mt level may extend tonight. 

Lead: Pressure from the 17,000 yuan/mt level stemmed the increase in the most-traded SHFE November contract, which closed down 0.09% on the day at 16,900 yuan/mt. Support from the 60-day moving average and a strong LME lead may lift the contract tonight, but its upsides will be capped. 

Tin: The most-liquid SHFE January 2020 contract continued to pare previous gains, finishing the Friday session at 136,150 yuan/mt, down 0.31% on the day. Departing longs lowered the open interest by 380 lots to 38,868 lots. Support below is seen from 135,000 yuan/mt tonight.