SHANGHAI, Jul 27 (SMM) – Both nonferrous and ferrous metals rose across the board on Friday July 27 after Chinese authorities said that China's industrial profits jumped 20% from a year ago in June.
Nickel led the increases with a gain close to 1%. Tin rose 0.81% and aluminium, lead, copper and zinc inched up.
The nonferrous complex notched a strong performance with coke surging over 4%. Iron ore jumped 3.5% with rebar up over 3% and hot-rolled coil up close to 3%. Coking coal inched up.
Copper: The SHFE 1809 contract traded rangebound around 50,000 yuan/mt during the day. Technically, MACD red line lengthened while the KDJ lines converged. We expect it to test support at 50,000 yuan/mt tonight. The market can take some cues from the US second-quarter gross domestic product (GDP) and July consumer confidence data.
Aluminium: After shorts dragged the SHFE 1809 contract down to 14,335 yuan/mt, it recovered some losses in the morning. In the afternoon, the contract climbed to 14,435 yuan/mt, its highest in close to three days, but lost some gains with resistance at the five-day moving average. Open interest for the October contract saw another larger increase than the September contract today. The contract is likely to try to rise with support at the 20- and 40-day moving averages.
Zinc: The SHFE 1809 contract lost most of its overnight gains today with strong resistance at the five- and 20-day moving averages. We expect it to test support at 21,200 yuan/mt tonight.
Nickel: The SHFE 1809 contract initially extended its overnight gains to an intraday high of 112,940 yuan/mt. It then fell and found some support at 112,000 yuan/mt. Technically, its KDJ lines expanded upwards and diverged while the MACD line turned red. We expect it to hover around 112,000 yuan/mt tonight.
Lead: The SHFE 1809 contract rebounded slightly and hovered around its daily moving average during the day after its initial decline. The contract edged down before it closed. The contract managed to stand above the 20-day moving average today. Trading volumes shrank for three consecutive days. We expect the contract to consolidate around the 20-day moving average tonight. Market participants should be cautious, as fundamentals have not accounted for recent gains. Instead, the Chinese government's fiscal stimulus have driven recent increases.
Tin: As shorts covered their positions and longs added their positions, the SHFE 1809 contract jumped during the day after its initial decline. The contract stood firmly above its five-day moving average and hit the 40-day moving average. Technical indicators suggest growing upward momentum.