SHANGHAI, Jun 26 (SMM) – Both nonferrous and ferrous metals futures, except for SHFE lead, fell across the board on June 26. Lead jumped over 1.2%, while nickel slumped nearly 2.5%. Zinc and aluminium lost some 1.1%. Tin and copper inched down.
Coke plunged nearly 3.9%, coking coal dropped 2.1%, rebar declined 1.8%, and hot-rolled coil went down 1.4%. Iron ore closed slightly lower.
Copper: The SHFE 1808 contract broke the support at 51,500 yuan/mt to a low of 51,330 yuan/mt on rising tension over a global trade war. The contract rebounded to above the daily moving average near closing as shorts exited but faced pressure at the 60-day moving average. It is likely to hover around 51,500 yuan/mt in the short term. Investors would look for more cues tonight from the US consumer confidence in June surveyed by the Conference Board.
Aluminium: Shorts entered the market with enthusiasm today, dragging SHFE aluminium to a low of 13,985 yuan/mt today. The downward movement is within expectation as consumption weakens, inventory draw slows, and cost of production declines. Other factors including the US-China trade war and the slowing of shanty town redevelopment also present a more bearish case in the medium term.
Zinc: The SHFE 1808 contract consolidated around the daily moving average at 22,530 yuan/mt level after opening, and surged to a high of 22,760 yuan/mt in the afternoon as shorts left. Open interests for 1807 and 1808 contracts declined over 24,000 lots during the day. We expect the 1808 contract to trade at 22,500-23,000 yuan/mt tonight with limited downward room.
Nickel: As worries over an intensified global trade war weighed on base metals prices, the SHFE 1809 contract slumped 2,920 yuan/mt from Monday to close at 114,360 yuan/mt. It mostly hovered at 114,770 yuan/mt during the day as tight supply of nickel pig iron (NPI) on environmental cut provided some support. The contract saw a capital outflow of some 200 million yuan today, topping the base metals futures. It is expected to hover at lows tonight.
Lead: The SHFE 1808 contract initially broke the 10- and 20-day moving averages to a high of 19,940 yuan/mt with inflows of funds. It then fell to a low of 19,665 yuan/mt as the nonferrous complex weakened. Before close, it climbed up with support from longs. We expect the contract to continue its upward trend in near term and to test support at the 20-day moving average tonight.
Tin: The SHFE 1809 contract rebounded from a low of 144,060 yuan/mt today but remained below the five-day moving average. It is expected to trade rangebound in the short term with support at 143,000 yuan/mt and resistance at 147,000 yuan/mt.