SMM Evening Comments (Oct 14)

SHANGHAI, Oct 14 (SMM) – SHFE nonferrous metals closed mostly lower on Monday October 14, as bullish positions booked profits and exited after US and China agreed to trade truce. Aluminium led the losses and dip 0.69%. Zinc slid 0.24%, nickel lost 0.56%, lead went flat, while tin added 0.61%, and copper advanced 0.11%. 

The ferrous composite also fell for the most part as iron ore lost 2.37%, rebar dipped 1.32%, hot-rolled coil shed 0.77%, coke slipped 2.7%, while stainless steel rose 0.13%. 

Copper: Upbeat sentiment about progress in US-China trade and a Brexit deal supported the most-liquid SHFE December contract around the 47,040 yuan/mt level, before longs booked profits and trimmed gains in the contract, which ended up 0.11% at 46,970 yuan/mt. With support below from the 10-day moving average, the contract may continue to test the 47,000 yuan/mt level tonight. 

Aluminium: Capital withdrawal drove the most-liquid SHFE November contract 0.69% lower by Monday’s close, extending losses from the previous four sessions. Open interest lost 10,618 lots to 179,490 lots as both long and short positions exited. The backwardation in SHFE November and December contract narrowed, with a price spread of 20 yuan/mt. Weaker-than-expected consumption recovery grew worries about nearby supply pressure, but continued drawdown in domestic stocks may underpin prices tonight. 

Zinc: The most-active SHFE December contract fell for the second consecutive session on loaded-up short positions and a weakened LME zinc. It remained above all moving averages, ending down 0.24% at 18,925 yuan/mt. Slightly buildup in social stocks over the weekend amid slowed purchases post-holiday are likely to cap upward momentum in the near-term prices. Pressure from 19,000 yuan/mt will be monitored tonight. 

Nickel: The most-liquid SHFE December contract hovered in a narrow band around 136,000 yuan/mt today, with pressure above from the five-day moving average and support from 135,000 yuan/mt. It closed 0.56% lower on the day at 135,770 yuan/mt. The rangebound trend may extend tonight. 

Lead: Weak fundamentals drove shorts to add their positions, dragging the most-active SHFE November contract to a low of 18,860 yuan/mt, and ended it at 16,920 yuan/mt, flat on the day. Significant resistance from 17,000 yuan/mt will cap its upside room tonight. 

Tin: A stronger LME tin last Friday provided confidence in longs, which bolstered the most-liquid SHFE January 2020 contract to an intraday high of 138,050 yuan/mt, and ended it 0.61% higher on the day at 137,220 yuan/mt. Pressure above is seen from 137,500 yuan/mt, with support from 136,000 yuan/mt tonight.