SMM Morning Comments (Nov 18)

SHANGHAI, Nov 18 (SMM) –

Copper: Copper prices in London and Shanghai both recovered from earlier losses on Friday night, as US-China trade optimism and upbeat US retail sales data improved the outlook for global demand. Three-month LME copper closed the trading day 0.69% higher at $5,841/mt, while the most active SHFE contract ended marginally higher at 46,900 yuan/mt. Copper prices are expected to continue to rally today, with LME copper moving at $5,820-5,870/mt and SHFE copper at 46,800-47,100 yuan/mt. Spot premiums are seen firm at 100-130 yuan/mt, supported by limited availability and the need to fulfill long-term contracts.

Aluminium: Three-month LME aluminium on Friday rebounded from a two-week low of $1,733/mt to close at an intraday high of $1,757.5/mt, up 0.6% on the day. A weaker US dollar and optimism around the trade talks between Washington and Beijing contributed to Friday’s gains in LME aluminium, which is expected to trade between $1,745-1,765/mt today. As shorts added their positions in early and late trade, the most traded SHFE 2001 contract shed 0.26% to end at 13,650 yuan/mt on Friday night. It is expected to trade rangebound between 13,650-13,720 yuan/mt today, with spot premiums of 60-100 yuan/mt over the SHFE 1912 contract.

Zinc: Three-month LME zinc fell for a fourth straight day to a five-week low of $2,378/mt on Friday, before it recouped some losses to close a tad lower at $2,387.5/mt. LME zinc is expected to trade rangebound today, with a range of $2,370-2,420/mt, subdued by resistance from bearish technical indicators but supported by a decline in LME zinc inventories and US-China trade deal hopes. The most active SHFE 2001 contract hovered in a 40 yuan/mt range around the lower Bollinger band at 18,360 yuan/mt on Friday night, and ended up 0.11% at 18,365 yuan/mt. It is expected to trade between 18,200-18,500 yuan/mt today, with spot premiums for 0# domestic Shuangyan at 90-110 yuan/mt over the SHFE 1912 contract.

Nickel: Three-month LME nickel continued to fall on Friday, losing 1.12% to end $14,950/mt. It has fallen below all near-term moving averages and the lower Bollinger band. The most traded SHFE 2002 contract declined 1.53% to 117,500 yuan/mt on Friday night. It also has lost all support from key technical levels.

Lead: Three-month LME lead slipped to the lowest since September 4 at $1,997/mt on Friday, before it closed won 0.84% at $2,006/mt. LME lead has fallen for six consecutive days, keeping the market in a pessimistic mood. Tracking losses in LME lead, the most active SHFE 2001 contract slid to a low of 15,665 yuan/mt on Friday night, before it recovered some ground to close down 0.19% at 15,700 yuan/mt. Improved fundamentals are likely to stem the downtrend in SHFE lead in the short term, further recovering the ratio of SHFE/LME lead prices.

Tin: Three-month LME tin dropped 1.29% to $16,120/mt on Friday, while the most traded SHFE 2001 contract recovered from earlier losses to end a tad firmer at 134,730 yuan/mt on Friday night. Support is seen at $16,000/mt for LME tin, while SHFE tin faces resistance at a previous high around 135,500 yuan/mt.