SMM Evening Comments (Aug 30)

SHANGHAI, Aug 30 (SMM) – SHFE nonferrous metals closed mixed on Friday. Nickel was the best performer with a gain of 3.2%. Copper rose 0.2%, and tin advanced 0.1%, while zinc fell 0.2% and lead slipped 0.3%. Aluminium stayed flat.

The ferrous complex traded higher across the board. Iron ore saw the biggest gain of 4%, rebar climbed 1.4%, coke and hot-rolled coil increased by 0.9%, and coking coal advanced 0.7%.

Copper: The most active SHFE 1910 contract weakened during the day, erasing overnight gains to close the trading day 0.24% higher at 46,690 yuan/mt. About 117 million yuan exited from the SHFE copper complex on the day, as shorts covered their positions. A looming deadline for additional US tariffs on September 1, lingering worries about macro economies and a robust US dollar eroded upward momentum in SHFE copper. The contract has yet to convincingly stand above the 60-day moving average. Whether it could cling to the 46,700 yuan/mt level will come under scrutiny tonight.

Aluminium: The most traded SHFE 1910 contract inched up above the five-day moving average before it eased to close flat at 14,260 yuan/mt, as longs took profits. SHFE aluminium traded rangebound at highs, as investors digested the news that an aluminium smelter in Shandong will recover. It is likely to remain rangebound tonight, and rise next week if inventories continue to fall. Anticipation of consumption improvement in September will remain supportive.

Zinc: The most active SHFE 1910 contract fell to an intraday low of 18,700 yuan/mt in early morning trade, before it rebounded to fluctuate around 18,750 yuan/mt in the rest of trading hours to end 0.19% lower at 18,745 yuan/mt. The unwinding of long positions accounted for the losses on the day, while moving averages offered support. SMM data showed that social inventories of refined zinc across Shanghai, Guangdong and Tianjin declined from Monday, which might dampen investor sentiment. Resistance from the middle Bollinger band will come under scrutiny tonight.

Nickel: The most traded SHFE 1911 contract extended its gains to an all-time high of 130,890 yuan/mt, before it finished the day 3.16% higher at 130,750 yuan/mt. About 1.08 billion yuan flowed into the contract on the day, with open interest expanding 93,488 lots to 467,714 lots. Whether SHFE nickel could hold above 130,000 yuan/mt is crucial to watch tonight.

Lead: The most active SHFE 1910 contract hovered around 17,300 yuan/mt in a wide range to end the day 0.32% lower at 17,245 yuan/mt. SHFE lead continued its retreat, but longs slowed their exit. As its LME counterpart weakened, SHFE lead is expected to test support at the five-day moving average tonight.

Tin: As shorts trimmed their positions, the most traded SHFE 2001 contract rebounded to an intraday high of 129,640 yuan/mt in early morning trade, before it hovered around 129,500 yuan/mt in the rest of the day to close 0.12% higher at 129,480 yuan/mt. Resistance is seen at 130,000 yuan/mt, while support is at 128,000 yuan/mt.