SMM Evening Comments (Jul 18)

SHANGHAI, Jul 18 (SMM) – SHFE nonferrous metals, except for copper and aluminium, closed higher on Thursday. Nickel remained the best performer and hit the upper daily limit. Lead rose 1.2%, zinc advanced 0.9% and tin climbed 0.7%.

The ferrous complex, except for coke, traded lower. Rebar dropped 1.7%, hot-rolled coil fell 1.2%, iron ore shed 0.6% and coking coal edged down 0.04%.

Copper: The most active SHFE September contract fluctuated during the day to end at 46,780 yuan/mt, extending overnight losses to shed 0.45% on the day. Downbeat US homebuilding data released on Wednesday firmed expectations of Fed rate cuts, which weighed on the US dollar and provided support to copper. The contract is under pressure from the five-day moving average, with KDJ lines expanding downwards. It is expected to try to hold into its ground at 46,800 yuan/mt tonight.

Aluminium: A load-up of long positions boosted the most traded SHFE September contract during the day, recovering from earlier losses to end 0.11% weaker at 13,870 yuan/mt. Weakening consumption and lower costs will weigh on SHFE aluminium in the short term, but the anticipation of a consumption recovery at the end of the third quarter will offer support. SMM data showed that social inventories of primary aluminium ingots little changed on week.

Zinc: Gains in LME zinc bolstered the most active SHFE September contract a two-week high of 19,645 yuan/mt before resistance from the 40-day moving average forced the contract to relinquish some gains to close 0.9% higher at 19,600 yuan/mt. The spread between the August and September narrowed to zero, reflecting growing expectations of greater supply. The SHFE 1909 contract is expected to trade rangebound around the 40-day moving average tonight, as shorts and longs diverge.

Nickel: The most traded SHFE October contract extended its recent rally and hit the upper daily limit at 117,150 yuan/mt before it closed the trading day 5.94% higher at 117,090 yuan/mt. About 408 million yuan of funds entered the contract on the day. The contract is expected to continue its robust performance tonight.

Lead: As longs aggressively loaded up their positions, the most active SHFE September contract extended overnight gains to a three-month high of 16,635 yuan/mt in early morning trade, before it pared some gains to close 1.2% higher at 16,500 yuan/mt. Shanghai lead longs built some 18,000 lots of positions over the last three trading days, which dampened morale among shorts. SHFE lead is likely to continue its strong performance tonight, if its LME counterpart continues to firm up.

Tin: The most traded SHFE September contract rapidly rose to a one-week high of 136,550 yuan/mt in early morning trade before its shed some gains to finish the trading day 0.71% higher at 134,700 yuan/mt. SHFE tin continued its rangebound pattern, with support from the five-day moving average and pressure from the 10-day average. Support is seen at 132,000 yuan/mt, while resistance is at 137,500 yuan/mt.