SHANGHAI, Jul 5 (SMM) – Both nonferrous and ferrous metals fell across the board, except for rebar, on Thursday July 5 as the imminent US tariffs on Chinese imports weighed on market sentiment.
SHFE zinc led the decreases with a slump over 4%. Copper tumbled close 3% and nickel dropped over 2%. Lead and tin lost close to 2% with aluminium fell close to 1%.
Coke, iron ore and coking coal slid over 1%. Hot-rolled coil edged down almost 1%.
Copper: The SHFE 1808 contract resumed its donward trend after it briefly rebounded on the eve of Washington’s deadline to impose tariffs on Chinese imports. The contract is likely to extend its declines if market sentiment worsens after the tariffs are imposed. The market will take cues from the US ADP employment data and initial unemployment claims tonight.
Aluminium: After it hit a high of 14,110 yuan/mt in the morning trading session, the SHFE 1809 contract plummeted to a new low of 13,940 yuan/mt. We expect it to remain weakly rangebound in the short term with limited downward room. SMM will monitor the impact from the alumina production cut in Shanxi.
Zinc: The SHFE 1808 contract broke the 22,000 yuan/mt level again to a new low of 21,675 yuan/mt in close to a year. This came after it rebounded above the daily moving average to a high of 22,300 yuan/mt. Longs fled the market as the consecutive tumble fuelled bearish sentiment. We expect the contract to remain weak tonight with support at the 21,500 yuan/mt level.
Nickel: With resistance at the 40-day moving average, the SHFE 1809 contract fell to the daily moving average after it climbed to a high of 112,260 yuan/mt in the morning. It hovered around the 111,850 yuan/mt level in the afternoon with pressure at the 112,000 yuan/mt level. Its KDJ lines diverged and expanded downwards while its MACD green line lengthened. We expect the contract to trade rangebound around the 111,000 yuan/mt level tonight. Market participants can take cues from economic data such as the US ADP employment data, initial unemployment claims and oil inventory data from the Energy Information Administration.
Lead: As base metals weakened, the SHFE 1808 contract fell below the 40-day moving average, after it climbed to a high of 19,795 yuan/mt as longs increased after opening. The contract closed at 19,605 yuan/mt with open interests up 420 lots to 67,934 lots, which marked the first rise this week. It is likely to test support at 19,500 yuan/mt tonight as pressure from shorts intensify.
Tin: The SHFE 1809 contract fell to a low of 142,500 yuan/mt during the day as shorts significantly added their positions. We see a weak pattern for the contract in the short term. Support is seen at the 142,500 yuan/mt level and the 140,000 yuan/mt level tonight.