SMM Evening Comments (Nov 1)

SHANGHAI, Nov 1 (SMM) – SHFE nonferrous metals, except for aluminium and nickel, closed lower on Friday. Tin dropped 0.7%, copper fell 0.5%, lead shed 0.2%, and zinc dipped 0.1%.

The ferrous complex also saw mixed performance. Iron ore rose 0.6%, rebar gained 0.2%, and coke inched up 0.1%, while stainless steel dipped 0.1%, hot-rolled coil slipped 0.3% and coking coal lost 0.5%.

Copper: The most active SHFE 1912 contract rose during the daytime session, recouping some losses from overnight trading when it plumbed a two-week low of 46,780 yuan/mt, as Caixin PMI reading showed that China’s manufacturing sector expanded more than expected in October. It finished the trading day 0.53% lower at 47,120 yuan/mt. Investors moved to the later-dated contract, with open interest for the 2001 contract expanding close to 15,000 lots to 159,000 lots on the day. SHFE copper has broken below the 10-day moving average, and is likely to test 47,000 yuan/mt tonight.

Aluminium: The most traded SHFE 1912 contract climbed to a two-week high of 13,905 yuan/mt in afternoon trade, before it eased to end the trading day 0.36% higher at 13,875 yuan/mt. SHFE aluminium is likely to reverse more gains tonight, but support is seen at the 10-day moving average at 13,830 yuan/mt.

Zinc: The most active SHFE 1912 contract fluctuated during the daytime session, and finished the trading day 0.13% weaker at 18,955 yuan/mt. Investors trimmed their long positions on the day, as this week’s decline in zinc social inventories across Shanghai, Tianjin and Guangdong was too moderate to boost market sentiment. Strength at the middle Bollinger band will be closely watched tonight.

Nickel: The SHFE 1912 contract climbed during the daytime session, returning above the five-day moving average and recovering from overnight losses to end up 0.49% at 134,560 yuan/mt. Whether SHFE nickel could surpass 135,000 yuan/mt will come under scrutiny tonight. Notably, 224 million yuan flowed into the SHFE nickel contracts on the day, with about a half entering the 2001 contract.

Lead: The most active SHFE 1912 contract slipped to a new 2-1/2-month low of 16,455 yuan/mt in morning trade, as the overnight plunge in LME lead drove investors to load up short positions. It later clawed back some losses on short-covering, and ended down 0.21% at 16,575 yuan/mt. Resistance from moving averages and a continued pullback in LME lead will likely force SHFE lead to test 16,500 yuan/mt again tonight.

Tin: The most traded SHFE 2001 contract extended its overnight decline to its lowest in more than two weeks at 136,620 yuan/mt in morning trade, before it recovered some ground to end down 0.73% at 137,220 yuan/mt. Support is seen at the 60-day moving average at 136,000 yuan/mt.