SMM Evening Comments (Nov 14)

SHANGHAI, Nov 14 (SMM) – SHFE nonferrous metals closed broadly lower on Thursday, as disappointing Chinese economic data and doubts over US-China trade negotiations dented risk appetite.

Lead and zinc both dropped more than 0.9%, nickel fell 0.6%, tin shed 0.4%, and copper edged down 0.02%, while aluminium stayed flat.

Official data released this morning showed that Chinese retail sales, industrial output and investment data all came in weaker than expected.

Risk-off sentiment, meanwhile, boosted demand for safe-haven assets, with US gold futures rising for a third straight day to the $1,470/oz handle.

The ferrous complex, however, continued their strong performance and drifted higher across the board.

Hot-rolled coil led the gains with a 2.7% increase, coke jumped 2.3%, rebar climbed 2%, iron ore rose 1.7%, coking coal advanced 1.5%, and stainless steel inched up 0.07%.

Tonight, investors may monitor economic data out of the eurozone and US for clues on the state of major economies.

The US will publish its factory-gate inflation data for October, after consumer price inflation released overnight beating expectations.

In Europe, the latest data showed that German gross domestic product (GDP) grew 0.1% in the third quarter, exceeding the -0.1% contraction expected and narrowly avoiding a technical recession.

Copper: The most active SHFE 2001 contract recovered from earlier losses to close the trading day a tad weaker at 47,030 yuan/mt, after plumbing a four-week low of 46,850 yuan/mt in overnight trade. SHFE copper has lost support at the 60-day moving average, with an extended MACD green bar. Whether it could remain above 47,000 yuan/mt will come under scrutiny tonight.

Aluminium: The most traded SHFE 1912 contract climbed to an intraday high of 13,865 yuan/mt in afternoon trade, before it gave back all those gains to close flat at 13,805 yuan/mt.

Zinc: The most active SHFE 2001 contract strengthened during the daytime session, recovering somewhat from losses made in overnight trade when it touched the lowest in nearly three months at 18,225 yuan/mt. SHFE zinc finished the trading day 0.94% lower at 18,395 yuan/mt. Short positions accounted for the majority of the buildup in open interest on the day, as downbeat economic data, expanding supply and weakening demand intensified pessimistic mood across the market. Resistance at the lower Bollinger band should be closely watched tonight.

Nickel: The most traded SHFE 2002 contract climbed during the daytime session, recovering from overnight losses to close the trading day 0.61% lower at 121,560 yuan/mt. SHFE nickel now stands above the lower Bollinger band, but faces resistance from several moving averages. It took a breather today, after four consecutive days of declines. Whether it could stabilise should be closely watched tonight.  

Lead: The most active SHFE 1912 contract hovered in a tight range around the daily moving average during the daytime session, and touched the lowest since May 31 at 15,720 yuan/mt in the final trading hour. It ended down 0.97% at 15,810 yuan/mt, continuing its downtrend to new lows. With a weakening LME counterpart, SHFE lead sees no signs of a pause to its recent downward run.

Tin: The most traded SHFE 2001 contract slipped to a six-week low of 133,450 yuan/mt in early morning trade, before it recovered some ground to close down 0.4% at 134,700 yuan/mt.