SMM Evening Comments (Oct 23)

SHANGHAI, Oct 23 (SMM) – SHFE nonferrous metals closed mixed on Wednesday. Nickel jumped 3%, tin rose 0.5%, and aluminium inched up 0.07%, while copper shed 0.5%, zinc fell 0.7% and lead dropped 0.9%.

The ferrous complex drifted higher across the board. Coke led the increases with a 1.6% gain, iron ore and coking coal climbed 1.2%, stainless steel increased by 0.8%, hot-rolled coil advanced 0.4%, and rebar gained 0.2%.

Copper: The most active SHFE 1912 contract slipped during the daytime session, extending overnight losses to close down 0.45% at 46,930 yuan/mt, as investors exited with Brexit looking set for a delay again. Whether SHFE copper could hold above 46,900 yuan/mt will come under scrutiny tonight.   

Aluminium: As shorts cut their positions, the most traded SHFE 1912 contract recovered from earlier losses to close the trading day marginally higher at 13,790 yuan/mt. SHFE aluminium faces strong resistance at 13,800 yuan/mt, but remains supported by falling inventories and firm spot premiums. The contract is expected to remain weak and rangebound tonight, awaiting for a direction.  

Zinc: The most active SHFE 1912 contract traded rangebound during the daytime session, failing to recover from overnight losses and ending down 0.66% at 18,800 yuan/mt. The buildup of short positions accounted for today’s loss in SHFE zinc, as slowing economic growth kept investors pessimistic. SHFE zinc faces downward pressure in the short term, and whether it could remain above the 40-day moving average should be watched tonight.

Nickel: The most traded SHFE 1912 contract hovered in a tight range during the day, supported by 129,000 yuan/mt but subdued by 130,000 yuan/mt. It finished the trading day 2.98% higher at 129,970 yuan/mt, holding onto overnight gains bolstered by Nornickel accident. Today’s substantial gain stemmed recent declines in SHFE nickel and pulled it back above the five-day moving average. About 253 million yuan exited from the contract on the day. A major resistance area to watch tonight is at 130,000 yuan/mt.

Lead: The most active SHFE 1911 contract fell below the 60-day moving average to a one-month low of 16,640 yuan/mt, before it ended the trading day 0.92% lower at 16,665 yuan/mt. In view of fundamentals and technical indicators, we see further downside room in SHFE lead, with immediate support at 16,500 yuan/mt.

Tin: As longs trimmed and shorts added positions, the most traded SHFE 2001 contract eased during the daytime session, after hitting a high of 139,310 yuan/mt overnight. It finished the trading day 0.52% higher at 138,380 yuan/mt. Upside potential in SHFE tin will be hampered by sluggish demand in the short run. Support is seen at the 20-day moving average as low as 137,000 yuan/mt, while resistance is at 140,000 yuan/mt.