SMM Evening Comments (Oct 23)

SHANGHAI, Oct 23 (SMM) – SHFE nonferrous contracts gained for the most part while the ferrous complex closed mixed on Tuesday. 

SHFE aluminium led the increase and jumped 0.53%, zinc grew 0.45%, tin inched up 0.31%, lead gained 0.05%, while nickel went down 0.91%, and copper fell 0.69%. 

Coking coal surged 1.2%, rebar rose 0.19%, while hot-rolled coil lost 0.67%, iron ore slid 0.38%, and coke fell 0.02%. 

Copper: A lack of confidence across longs lowered the SHFE 1812 contact below the five-day moving average, but the 50,000 yuan/mt level provided strong support. It closed at 50,060 yuan/mt with some 327 million yuan of capital moving out of SHFE copper contracts, the greatest among base metals contracts. The contract is expected to test support at 50,000 yuan/mt tonight. Changes in short positions should be closely monitored. 

Aluminium: The SHFE 1812 contract started to pick up in the second trading session for the afternoon as shorts left the market, and rose to an intraday high of 14,210 yuan/mt. It closed at 14,200 yuan/mt with open interests down 3,268 lots to 238,000 lots. This marked the third consecutive day of gains but the contract remained below the 10-day moving average. The contract will continue to test pressure at the five-day moving average tonight. 

Zinc: The SHFE 1812 contract came off from a high of 22,135 yuan/mt, and broke support at the five- and 10-day moving averages to close at 21,890 yuan/mt. Open interests increased 2,666 lots to 183,000 lots. However, firm spot premiums and a stronger LME zinc during the European trading session are likely to support the contract tonight. The contract may rebound to the five- and 10-day moving averages tonight. 

Nickel: Accumulated shorts dragged the SHFE 1901 contract down sharply near noon, from a high of 103,820 yuan/mt. The contract extended its decline in the afternoon and dipped to a low of 102,440 yuan/mt, settling at 102,720 yuan/mt. Open interests increased 16,000 lots during the day. As the MACD red line shortened, we expect the contract to hover around 103,000 yuan/mt tonight. 

Lead: The SHFE 1812 contract hovered between the Bollinger middle and upper bands with the highest level at 18,210 yuan/mt. With support at 18,000 yuan/mt, it closed in the black at 18,125 yuan/mt. Heavy pressure was seen at the 10-day moving average above. Tonight, the contract will test support at the 20-day moving average.

Tin: News about the shutdown of beneficiation plants in Gejiu of Yunnan province pulled up the SHFE 1901 contract after opening, to an intraday high of 148,540 yuan/mt before noon. It came off from highs to close at 147,670 yuan/mt with open interests down 1290 lots. It is likely to continue its rangebound trend tonight with support at 146,000 yuan/mt and resistance at 149,000 yuan/mt.