SMM Morning Comments (Feb 2)

SHANGHAI, Feb 2 (SMM) –

Copper: A stronger Chinese yuan, a lower SHFE/LME price ratio, and tighter funds ahead of Chinese New Year led us to expect a rangebound trading for the SHFE copper contract. We see support at 52,500-53,000 yuan/mt today while LME copper may trade at $7,080-7,140/mt. Spot discounts are seen at 100-40 yuan/mt today with reluctant sellers.  

Aluminium: LME aluminium sees pressure at the five-day and 10-day moving averages and is set to trade at $2,210-2,240/mt today. SHFE aluminium may aim for the five-day moving average following a small rebound but we expect it to trade at 14,250-14,450 yuan/mt today. Spot discounts remained at 140-100 yuan/mt.

Nickel: We see the SHFE 1805 contract at 103,500-105,500 yuan/mt today with spot prices at 102,800-104,500 yuan/mt. The weaker US dollar and lower LME inventory have provided rather firm support.

Zinc: We see LME zinc at $3,525-3,575/mt today with inventory lowering to the 170,000 mt level. Bullish sentiment remains for SHFE zinc which is expected to trade at 26,600-27,100 yuan/mt today. In the physical market, the 0# common brand sees spot discounts at 100-60 yuan/mt and the Shuangyan brand is to trade with discounts of 70-40 yuan/mt.

Tin: LME tin sees support at $21,200/mt and we expect it to stay under pressure in the short term. The SHFE counterpart is likely to trade at 148,000-150,000 yuan/mt today with spot prices at 147,000-149,000 yuan/mt.

Lead: SHFE lead followed the lead of its LME counterpart overnight and touched a high at 19,785 yuan/mt. We expect the contract to trade above all moving averages at 19,600-19,800 yuan/mt today.

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