SMM Morning Comments (Oct 22)

SHANGHAI, Oct 22 (SMM) – 

Copper: Protests in major copper producer Chile fueled concern about supplies and buoyed copper prices overnight. Three-month LME copper returned above the daily moving average and finished the session at $5,841/mt, with the most-traded SHFE December contract ending up 0.19% at 47,160 yuan/mt. Limited improvement in global economic growth and weak oil prices amid worries about demand may unlikely sustain the rally in copper prices. Growing inventories of copper cathode in China indicated sluggish consumption, which will also weigh on prices of the metal. Today, LME copper is seen trading between $5,800-5,850/mt with the SHFE contract between 46,900-47,300 yuan/mt. 

Aluminium: Three-month LME aluminium relinquished earlier gains and came off from a high of $1,741/mt to below all moving averages, closing at $1,724/mt. Trends in the most-liquid SHFE December contract also weakened, as it fell below the five- and 10- day moving averages and failed to regain losses during the previous session, ending at 13,770 yuan/mt. It is expected to trade at 13,700-13,820 yuan/mt with LME aluminium at $1,710-1,750/mt today. 

Zinc: Three-month LME zinc moved higher for the third straight session, boosted by consecutive declines in LME zinc inventories, a firm backwardation structure, and easing trade tensions between China and the US. It closed up 0.65% on the day at $2,469/mt. The most-traded SHFE December contract hovered above all moving averages and also finished 0.05% higher at 18,935 yuan/mt. With lower social inventories of refined zinc over the weekend and higher domestic zinc production in September, the contract may consolidate between 18,700-19,200 yuan/mt today, with LME zinc between $2,430-2,480/mt today. 

Nickel: Three-month LME nickel fell below the Bollinger lower band overnight, with the most-traded SHFE December contract trading weakly around 126,000 yuan/mt. Today, support from $16,000/mt and 126,000 yuan/mt, will be closely monitored, respectively. 

Lead: Three-month LME lead returned above $2,200/mt after the US dollar hit a three-month low, ending 1.77% higher on the day at $2,211/mt. The most-traded SHFE November contract also recovered to the 17,000 yuan/mt level, and closed up 0.18% at 17,045 yuan/mt, with support from the 60-day moving average. However, deepened discounts of secondary lead and signs of weaker consumption may hurt confidence in bullish positions, and keep the contract struggling around 17,000 yuan/mt today. 

Tin: The most-traded SHFE January 2020 contract is expected to stabilise between 137,000-139,000 yuan/mt today with three-month LME tin testing support from the 20-day moving average, or $16,500/mt.