SMM Evening Comments (Jul 19)

SHANGHAI, Jul 19 (SMM) – SHFE nonferrous metals, except for tin, closed higher on Friday, as overnight comments from a Federal Reserve official raised expectations of a more aggressive easing from the US central bank.

Nickel remained the best performer with a gain of 3.8%. Copper rose 2.5%, lead advanced 1.4%, zinc climbed 0.6% and aluminium increased by 0.5%.

The ferrous complex traded mixed. Iron ore rebounded 2.4%, coking coal crept up 0.4%, and hot-rolled coil rose 0.2%, while rebar fell 0.3% and coke dropped 0.5%.

Copper: An aggressive position load-up by longs sharply bolstered the most active SHFE September contract in early morning trade, and the contract extended its gains to a two-month high of 48,040 yuan/mt in afternoon trade before it closed 2.52% higher at 47,970 yuan/mt. About 1.02 billion yuan flowed into the contract on the day. The contract has broken the 60-day moving average to the 48,000 yuan/mt level, and is expected to try to stand above 48,100 yuan/mt tonight.

Aluminium: As longs added their positions, the most traded SHFE September contract climbed to a six-day high of 13,975 yuan/mt, near the 60-day moving average before a buildup of short positions forced it to give up some gains to close 0.54% higher at 13,935 yuan/mt. Macroeconomic developments dictated recent market moves, as fundamentals remained unchanged. Lower costs and weaker consumption will take a toll, while an anticipated recovery at the end of the third quarter offers support. SHFE aluminium is expected to fluctuate to see a higher trading level next week.

Zinc: The most active SHFE September contract rose to an intraday high of 19,660 yuan/mt on a load-up of long positions, before it trimmed some gains to close 0.57% higher at 19,575 yuan/mt due to resistance from the 40-day moving average. SMM data showed a modest decline in social inventories of refined zinc across Shanghai, Tianjin and Guangdong this week, which grew expectations of an inventory rebound in the near future, and dampened morale among longs. The contract is expected to trade around the 40-day moving average tonight.

Nickel: The most liquid October contract rose for an eighth straight day to 119,240 yuan/mt, its highest since July 2018, before it finished the trading day 3.77% higher at 118,430 yuan/mt. As its LME counterpart pulled back in European trading hours, SHFE nickel is likely to retreat under the pressure from the 120,000 yuan/mt level tonight.

Lead: As longs continued to pile in the market, the most traded SHFE September contract extended its rally to a fresh three-month high of 16,725 yuan/mt before it finished the trading day 1.4% higher at 16,675 yuan/mt. This helped the contract register a weekly gain of 3.51% and lifted the five- and 10-day moving averages. The contract is expected to continue to follow its LME counterpart higher tonight.

Tin: The most active SHFE September contract dropped shortly before the closing bell, losing earlier gains to end 0.16% lower at 134,950 yuan/mt. Support is seen at 132,000 yuan/mt, while resistance is at 137,500 yuan/mt.