SMM Evening Comments (Aug 13)

SHANGHAI, Aug 13 (SMM) – SHFE nonferrous metals traded mixed with nickel climbing 0.9%. Aluminium and zinc grew 1.3%, while tin lost 0.1%, copper fell 0.3%, and lead slid 1.5%.

The ferrous complex continued their increases as iron ore gained 0.4%, rebar rose 2.1%, hot-rolled coil advanced 0.9%, coke increased 0.7%, while coking coal went flat. 

Copper: The most-active SHFE October contract hovered within a broad range and extended declines from overnight. It rebounded from an intraday low of 46,550 yuan/mt around noon and ended 0.3% lower on the day at 46,560 yuan/mt. Prices may continue to face pressure from pessimism around the macroeconomic development. With pressure from the Bollinger middle band and bearish signs from technical indicators, the contract is expected to test support from 46,600 yuan/mt tonight.

Aluminium: The most-active SHFE October contract extended increases from overnight as it climbed to an intraday high of 14,285 yuan/mt, before it retreated and closed 1.25% higher on the day at 14,200 yuan/mt. Worries about typhoon affecting production in Shandong will continue to keep prices at highs, but the upside room will be limited until an official announcement. Strong support is expected below as the contract exceeded the 14,000 yuan/mt level. 

Zinc: Lower domestic inventories of refined zinc supported fundamentals, helping the most-active SHFE October contract to hold firm above the 18,500 yuan/mt level. It found support from the daily moving average and gained for the second straight day by 1.27%, to finish at 18,725 yuan/mt. The KDJ indicators expanded upwards, pointing to strong upward momentum in the contract. But pressure above from several moving averages will limit its upside room. It is expected to hover around the five-day moving average tonight. 

Nickel: The five-day moving average continued to offer support to the most-liquid SHFE October contract, which climbed to an intraday high of 124,700 yuan/mt before noon and pared some gains to end at 124,370 yuan/mt, up 0.87% on the day. Open interests grew 27,000 lots to 454,000 lots, with some 618 million yuan of capital flowing into all SHFE nickel contracts, topping base metals. Tonight, pressure above from the 126,000 yuan/mt level should be monitored. 

Lead: The end of environmental probes across lead producing areas in China grew concerns about higher supplies in August. This drove longs to cover their positions and settled the most-liquid SHFE September contract at 16,630 yuan/mt, down 1.48% on the day. A falling LME lead may extend weakness in the contract, which is expected to test support from 16,500 yuan/mt tonight. 

Tin: The most-liquid SHFE September contract weakened after rose to an intraday high of 135,060 yuan/mt in early trades, ending down 0.13% on the day at 133,520 yuan/mt. It remained around the five- and 20- day moving averages today, and may trade with support from 132,000 yuan/mt tonight.