SMM Evening Comments (Oct 21)

SHANGHAI, Oct 21 (SMM) – SHFE nonferrous metals closed mostly lower on Monday October 21, with nickel leading the losses and dipping 2.04%. Tin plunged 2%, aluminium eased 0.72%, lead lost 1.05%, while copper advanced 0.66%, and zinc climbed 0.58%. 

The ferrous composite also mostly fell as rebar dropped 0.09%, hot-rolled coil eased 0.03%, stainless steel shed 1.2%, coke declined 1.47%, while iron ore added 0.41%.  

Copper: A weaker greenback on bleak US economic data lifted the most-traded SHFE December contract to an intraday high of 47,180 yuan/mt. The contract pared some gains on limited confidence in the market, ending up 0.66% on the day at 47,020 yuan/mt. Dimmed outlook for global economic growth may see the contract testing support from 47,000 yuan/mt tonight. 

Aluminium: The most-traded SHFE December contract gave up most of the gains during the previous three sessions as loaded-up shorts weighed the contract below all moving averages right after it opened at 13,880 yuan/mt. It closed the trading day 0.72% lower at 13,760 yuan/mt. While weak fundamentals are set to keep aluminium prices under pressure in the fourth quarter, the pullback today indicated wavering confidence in the market. Support below from 13,800 yuan/mt will be monitored tonight. 

Zinc: The most-liquid SHFE December contract continued to drift lower after declines last Friday night, slipping below 18,900 yuan/mt and closed at 18,925 yuan/mt, still up 0.58% on the day. The KDJ indicators expanded slightly higher, indicating limited upward momentum in the contract. Continued drawdown in refined zinc inventories may provide some support to prices. Tonight, the contract is seen consolidating around the five-day moving average. 

Nickel: The most-traded SHFE December contract failed to hold above 128,000 yuan/mt as it slumped to 125,330 yuan/mt, the lowest since the end of August, and finished 2.04% lower on the day at 126,390 yuan/mt. It lost support from the 60-day moving average and support from 125,000 yuan/mt will be monitored tonight. 

Lead: Pullback in lead prices extended as the most-traded SHFE November contract slid to an intraday low of 16,895 yuan/mt and closed 1.05% lower on the day at 16,910 yuan/mt amid weak fundamentals. Price spread between primary and secondary lead expanded to 500-600 yuan/mt, which intensified bearish sentiment. SMM retains a pessimistic outlook for lead prices tonight. 

Tin: The most-traded SHFE January 2020 contract relinquished gains from the previous three sessions as departing long positions drove it to an intraday low of 137,030 yuan/mt, before the contract closed down 2% at 137,980 yuan/mt. Open interest shrank 2,754 lots to 40,212 lots as longs covered their positions. Support below is expected from 137,000 yuan/mt tonight.