SMM Evening Comments (Sep 12)

SHANGHAI, Sep 12 (SMM) – SHFE nonferrous metals, except for lead, ended in negative territory across the board on Wednesday. Copper lost 0.04%, aluminium dropped 1.5%, zinc and tin slid 0.75%, nickel decreased 0.42%.

Market participants tonight can take some cues from US weekly mortgage application activities, crude inventory data and producer price inflation for August.

Copper: The SHFE 1811 contract came off from an intraday high of 47,870 yuan/mt and settled at 47,730 yuan/mt. Open interests for forward contracts grew substantially and on-month spreads between the 1811, 1812 and 1901 contracts narrowed to less than 40 yuan/mt. The 1811 contract struggled around the five-day moving average today with pressure at the 10-day moving average. We expect the contract to try to stand above the five-day moving average tonight.

Aluminium: The SHFE 1811 contract lost all the gains from the previous two days as bearish sentiment lingered, fuelled by market talk that China would reduce winter production curbs. The contract fell past the 10- and 20-day moving averages to close at 14,555 yuan/mt today. We expect it to test the five-day moving average tonight.

Zinc: The SHFE 1811 contract failed to stand firmly above the 20-day moving average, after it surged to an intraday high of 20,530 yuan/mt as shorts exited. It closed at 20,425 yuan/mt with open interests down 1,378 lots to 184,000 lots. We expect it to receive support from its rising LME counterpart tonight and to test resistance above.

Nickel: The SHFE 1811 contract initially dropped to the lowest in close to five months, at 99,920 yuan/mt before it recovered all those losses to close at 101,930 yuan/mt. Its KDJ lines expanded upwards while the MACD green line shortened. We expect it to hover around 101,600 yuan/mt tonight.

Lead: The SHFE 1810 contract climbed during the day to close at 18,870 yuan/mt and regained some losses from the previous day. Open interest for the contract grew 1,472 lots to 58,680 lots. We see upward room and momentum for the contract after its previous correction. The contract is likely to continue to test pressure at 19,000 yuan/mt tonight.

Tin: The SHFE 1901 contract fell to end at 144,120 yuan/mt after it rebounded to 144,800 yuan/mt. Both shorts and longs added their positions today, indicating divergence. Support is seen at 143,000 yuan/mt and resistance is seen at 146,500 yuan/mt.