SMM Morning Comments (Sep 3)

SHANGHAI, Sep 3 (SMM) – 

Copper: Prices of copper were pressured by a higher US dollar amid intensified risk aversion after the fresh round of tariffs between Beijing and Washington kicked in and manufacturing data of the eurozone fell below expectations. Developments on the US-China trade front will continue to be watched. Three-month LME copper tested support from 5,600 yuan/mt with a low of 5,611 yuan/mt overnight, before it closed down 0.62%. The most-liquid SHFE contract fell 0.54% on the day with lows around 46,300 yuan/mt. It lost support from the five-day moving average and the Bollinger middle band, and may trade between 46,200-46,600 yuan/mt today. LME copper will trade within $5,600-5,650/mt. Spot premiums are likely to firm at 70-100 yuan/mt. 

Aluminium: Three-month LME aluminium hovered within a wide range and once fell below all moving averages to a low of $1,742.5/mt as the US dollar strengthened. It pared some losses and finished at $1,749/mt, down 0.46% on the day. The most-active SHFE October contract relinquished gains from the daytime and struggled around the five- and 10- day moving averages. Expectations of higher supply drove longs to depart despite a decline in primary inventories over the weekend. Today, the contract is seen trading between 14,200-14,350 yuan/mt with LME aluminium at $1,740-1,780/mt. 

Zinc: Three-month LME zinc rebounded after a stronger US dollar dragged it to a low of $2,207.5/mt. It regained losses and finished 0.92% higher at $2,240.5/mt. As LME zinc inventories continued to shrink and the KDJ indicators moved higher to indicate upward momentum, prices may hover between $2,210-2,260/mt today. The most-liquid SHFE contract gained 0.43% to close at 18,720 yuan/mt, after the five-day moving average kept it from exceeding 18,730 yuan/mt. It is expected to hover rangebound between 18,500-19,000 yuan/mt today. 

Nickel: Loaded-up longs sent three-month LME nickel to the highest since mid-September 2014, at $18,850/mt, before it closed 0.31% higher on the day at $17,960/mt. It gained for the fourth straight trading day and firm above the Bollinger upper band. It is expected to test the $18,000/mt level today. Amid bullish sentiment, the most-liquid SHFE contract jumped to a record high of 145,850 yuan/mt and settled up 4.44% at 143,040 yuan/mt. It will extend a robust trend today. 

Lead: Three-month LME lead closed lower for the fourth consecutive trading day as it came off from highs and closed 0.25% lower at $2,023.5/mt. Support from the 40-day moving average was weak, which may see prices falling further today. The most-liquid SHFE October contract climbed overnight but with limited upward momentum, ended up 0.43% at 17,340 yuan/mt. Pressure from the 17,500 yuan/mt level should be monitored today. 

Tin: Three-month LME tin moved higher with its SHFE counterpart and hit a high of $17,575/mt, ending up 2% at $16,585/mt. It is likely to face resistance from $17,000/mt today, with support from $15,700/mt today. The most-traded SHFE 2001 contract gave up increases during the daytime as longs booked profits. It finished the trading day 0.97% higher at 134,900 yuan/mt, with support expected from 132,500 yuan/mt today.