SMM Evening Comments (Sep 17)

SHANGHAI, Sep 17 (SMM) – SHFE nonferrous metals, except for tin, closed lower on Tuesday September 17 with lead as the worst performer, dipping 3.17%. Nickel slumped 3.13%, copper shed 0.73%, aluminium fell 0.77%, zinc dropped 0.96%, while tin grew 0.03%. 

The ferrous complex also ended lower as iron ore lost 1.84%, rebar fell 0.56%, hot-rolled coil eased 0.84%, and coke went down 1.32%.

Copper: The most-active SHFE November contract hovered within a narrow band smaller than 160 yuan/mt and closed 0.73% lower on the day at 47,340 yuan/mt. The market awaited the US Federal Reserve's interest rate cut decision that will affect the movement of the US dollar and copper prices. Pressure from the Bollinger upper band and bearish signals from the KDJ indicators suggested limited upward momentum in the contract tonight. The contract will likely track its LME counterpart and test support from 47,300 yuan/mt. 

Aluminium: The most-liquid SHFE November contract slipped to the lowest since September as longs departed after the contract opened at 14,270 yuan/mt, sending it down to 14,205 yuan/mt. The contract regained part of the losses and closed at 14,240 yuan/ mt, down 0.28% on the day. Open interests lost 13,808 lots to 261,000 lots. Expectations of higher supply and sluggish consumption in the fourth quarter sustained the backwardation structure in the SHFE 1910-2001 contracts. With pressure from the Bollinger middle band, the contract is expected to trade between 14,200-14,300 yuan/mt tonight. 

Zinc: The most-traded SHFE November contract fell for the third straight session as it extended losses from overnight and moved lower to the 19,070 yuan/mt level, ending down 0.96% at 19,110 yuan/mt. The KDJ indicators expanded downwards, indicating further downside room in prices. Falling spot premiums suggested sufficient supplies, which dampened confidence in longs. Tonight, the contract will test support from the 10-day moving average. 

Nickel: Pullback of nickel prices continued as the most-liquid SHFE November contract drifted away from the five- and 10- day moving averages to hit a low of 134,300 yuan/mt, before it ended down 3.13% at 135,110 yuan/mt. Some 326 million yuan of capital flew out of all SHFE nickel contracts, the greatest among base metals. Tonight, the November contract is seen testing support from the 20-day moving average. 

Lead: Loaded-up shorts and exiting longs dragged the most-liquid SHFE October contract to nearly a-month low of 16,770 yuan/mt, and ended it down 3.17% on the day at 16,825 yuan/mt. Bearish sentiment will intensify if environmental restrictions fail to come as strict as expected. Tonight, the contract will test support from the 60-day moving average. 

Tin: The most-liquid SHFE January 2020 contract pared overnight increases as downbeat macroeconomic sentiment weighed on base metals. It still closed slightly higher on the day at 137,040 yuan/mt as longs remained dominant in the market. Tonight, the contract is likely to trade with support from the 60-day moving average, or 136,000 yuan/mt, and resistance from 139,500 yuan/mt.