SMM Evening Comments (Sep 23)

SHANGHAI, Sep 23 (SMM) – SHFE nonferrous metals ended mostly higher on Monday September 23 with nickel leading the gains and rising 1.5%. Tin rose 0.6%, lead grew 0.2%, aluminium gained 0.1%, while zinc fell 0.5%, and copper shed 0.6%. 

The ferrous complex rebounded as iron ore rallied 2.4%, rebar jumped 3.6%, hot-rolled coil gained 3%, and coke advanced 2%. 

Copper: The most-liquid SHFE November contract ended lower for the third straight session as it fell sharply to a low of 46,880 yuan/mt in the afternoon and closed down 0.55% at 46,870 yuan/mt, pressured by a strong greenback and US-China trade uncertainties. Departing longs reduced open interest in the November contract by 6,964 lots to 217,000 lots, while the December and January 2020 contracts saw a combined increase of 8,560 lots in open interest. Bearish signals from technical indicators are likely to keep the November contract testing support from 46,800 yuan/mt tonight. 

Aluminium: The most-active SHFE November contract consolidated within a narrow band as both longs and shorts exited amid risk aversion ahead of the National Day holiday. The contract closed 0.14% higher on the day at 14,215 yuan/mt, with open interest down 5,418 lots to 229,180 lots. Prospect of supply recovery outweighed bullishness around consumption pickup, and this drove long positions to book profits and left. Upward momentum in aluminium prices is seen weakening even as social inventories of primary aluminium continued to shrink. 

Zinc: Higher domestic inventories of refined zinc drove shorts to add their positions, sending down the most-liquid SHFE November contract to an intraday low of 18,805 yuan/mt, before it regained some losses and ended down 0.48% at 18,850 yuan/mt. Technical indicators indicated further downward room tonight. Support from the Bollinger middle band will be monitored.
 
Nickel: The most-active SHFE November contract hovered rangebound and extended rises from the previous three sessions. It climbed to an intraday high of 139,960 yuan/mt in the afternoon and finished the trading day 1.48% higher at 138,810 yuan/mt. Pressure above from the 10-day moving average, or the 140,000 yuan/mt level, will be watched tonight. 

Lead: The announcement of environmental cuts in north China’s Hebei province drove longs to enter, lifting the most-traded SHFE November contract to a high of 16,930 yuan/mt. The contract trimmed some gains and finished 0.18% higher on the day at 16,895 yuan/mt, after secondary lead smelters in Hebei showed limited inclination to close. As short-term moving averages trended downwards and LME lead slumped during the European trading session, the November contract is seen trading with little upward momentum tonight. 

Tin: A buildup of longs bolstered the most-traded SHFE January 2020 contract to an intraday high of 138,450 yuan/mt, and kept it hovering around 138,000 yuan/mt before ending up 0.64% at 137,320 yuan/mt. Tonight, it is expected to trade with pressure above from 138,500 yuan/mt and support from 136,000 yuan/mt.