SMM Evening Comments (Aug 29)

SHANGHAI, Aug 29 (SMM) – SHFE nonferrous metals closed mixed on Thursday. Nickel saw the biggest gain of 1.9%, tin inched up 0.2%, and lead nudged up 0.03%, while copper edged down 0.06%, and aluminium fell 0.5%. Zinc stayed flat.

The ferrous complex also traded mixed. Rebar dropped 0.6%, coke and coking coal declined 0.08%, while hot-rolled coil gained 0.2%. Iron ore closed flat.

Copper: The most active SHFE 1910 contract weakened during the day, relinquishing overnight gains to end its trading day a tad lower at 46,550 yuan/mt. Copper prices failed to cling to its ground at highs, due to lingering worries about a global economic downturn and a robust US dollar. There has yet to be signs of improvement in demand, and technical indicators show bearish signals. Whether the contract could remain above 46,500 yuan/mt is crucial to watch tonight.

Aluminium: The most active SHFE 1910 contract dropped below the five- and 10-day moving averages to lows of 14,200 yuan/mt in morning trade, as longs fled on news that an aluminium producer in Shandong will resume part of its capacity that previously broke down in the middle of September. The contract traded rangebound under the five-day moving average in the afternoon and finished the trading day 0.45% lower at 14,225 yuan/mt. SMM data showed that social inventories of primary aluminium ingots declined 30,000 mt this week, after four consecutive weeks of gains. This suggested that fundamentals are improving as expected. SHFE aluminium is expected to remain rangebound tonight.

Zinc: The most active SHFE 1910 contract wavered around 18,800 yuan/mt in a tight range to close flat at 18,805 yuan/mt. The exit of near-term shorts sent SHFE zinc back to the range of 18,500-19,000 yuan/mt. Morale among shorts weakened despite supply recovery and weak fundamentals. Support at the 10-day moving average will come under scrutiny tonight.

Nickel: The most traded SHFE 1911 contract extended overnight gains to close the day 1.86% higher at 127,340 yuan/mt. About 635 million yuan flowed into the contract on the day, the most among nonferrous complex. SHFE nickel has breached 127,000 yuan/mt and stood above the five- and 10-day moving averages. Resistance from 128,000 yuan/mt will come under scrutiny tonight.

Lead: Bargain-hunting bolstered the most active SHFE 1910 contract in afternoon trade, helping it claw back earlier losses to close the day marginally higher at 17,330 yuan/mt. Positive technical indicators suggest that the lead rally has yet to end and the current correction is temporary.

Tin: As shorts loaded up positions, the most traded SHFE 2001 contract eased during the day, paring overnight gains to end 0.16% higher at 128,700 yuan/mt. Support is seen at 127,500 yuan/mt.