SMM Evening Comments (Aug 19)

SHANGHAI, Aug 19 (SMM) – Most SHFE nonferrous metals closed higher on Monday. Aluminium saw the biggest gain of 1.3%, copper rose 0.4%, lead climbed 0.2%, and nickel inched up 0.06%, while zinc fell 0.6% and tin dropped 2.8%.

The ferrous complex also saw mixed performance. Rebar advanced 0.9%, coking coal rose 0.7%, and hot-rolled coil gained 0.5%, while coke shed 0.2% and iron ore declined 1%.

Copper: The most active SHFE October contract recovered from earlier losses during the day, ending 0.39% higher at 46,610 yuan/mt. Copper prices were bolstered by higher oil prices following a weekend attack on a Saudi oil facility by Yemeni separatists, but the gains in copper are likely to be reversed by lingering concerns about demand amid a global downturn. SHFE copper also faces resistance from several moving averages. Whether SHFE copper could remain above 46,600 yuan/mt will come under scrutiny tonight, and the London market will provide some cues.

Aluminium: The most traded SHFE October contract climbed to end at 14,395 yuan/mt, the highest since October 2018, up 1.27% on the day, as traders loaded up long positions on market talks that an accident occurred at a primary aluminium producer in Xinjiang. The company has yet to report the impact of the accident on its production. Open interest for the contract expanded nearly 30,000 lots to 351,000 lots.  

Zinc: As shorts flocked to the market, the most active SHFE October contract dropped to a low of 18,505 yuan/mt in early morning trade, before it fluctuated in the rest of trading hours to close the trading day 0.59% lower at 18,540 yuan/mt. Recent losses drove KDJ indicators downwards, while SMM data showed that social stocks of refined zinc across Shanghai, Guangdong and Tianjin inched up over the weekend. Resistance from the 10-day moving average will come under scrutiny, on the backdrop of weak fundamentals.

Nickel: Support from the five-day moving average helped the most traded SHFE October contract claw back earlier losses to end the trading day a tad higher at 125,910 yuan/mt. It’s worth nothing that trading volume for the contract shrank 511,000 lots to 765,000 lots. Open interest for the contract declined close to 13,000 lots to 465,000 lots, with 133 million yuan exiting. Whether SHFE nickel could surpass 126,000 yuan/mt is crucial to watch tonight.

Lead: The most active SHFE September contract advanced 0.24% on the day to end at 16,750 yuan/mt, as shorts trimmed their positions. Trading volumes for the contract failed to expand, while the five- and 10-day moving averages shaped a death cross, which will likely limit upward momentum in SHFE lead tonight.

Tin: Shorts knocked the most traded SHFE September contract to 129,820 yuan/mt, a low not seen since the start of July, before the contract finished the trading day 2.76% lower at 130,210 yuan/mt. This sent the contract below the five-day moving average. The first support is seen at 130,000 yuan/mt, with next support at 128,000 yuan/mt.