SMM Morning Comments (Apr 10)

SHANGHAI, Apr 10 (SMM) –

Copper: With upward room and firm support, LME copper broke the 20-day moving average while SHFE copper traded rangebound between the five- and 20- day moving averages. We see upbeat momentum in copper prices in the mid and long term but see pressure in the short term given high global inventories. We expect LME copper to trade at $6,800-6,850/mt today and SHFE copper to trade at 50,400-50,900 yuan/mt. In the physical market, spot premiums are seen wider at 60-100 yuan/mt as cargo holders are keen to offer high.

Aluminium: We expect LME aluminium to stay rangebound between the 40- and 60-day moving averages with a trading range at $2,110-2,150/mt given the simmering US sanctions on Rusal. We see firm upward momentum for SHFE aluminium amid the strong performance of its LME counterpart if destocking in China continues. But China’s aluminium still faces strong pressure from fundamentals in the medium term. We expect SHFE aluminium to trade at 14,280-14,480 yuan/mt today, with spot discounts at 80-40 yuan/mt.

Zinc: LME zinc registered a tall upper shadow and struggled at the five-, 10- and 20-day moving averages. We expect it to consolidate between $3,200-3,250/mt today. SHFE zinc climbed up from lows and closed slightly higher overnight. We expect it to consolidate between 24,150-24,650 yuan/mt today given bearish sentiments. The 0# common brand will trade at a premium of 20-50 yuan/mt and Shuangyan brand will trade at a premium of 40-60 yuan/mt.

Nickel: China’s stainless steel prices remain under pressure, while nickel inventories continue to edge lower. We expect LME nickel to be strongly rangebound with the SHFE nickel 1807 contract trading at 99,500-101,000 yuan/mt. Spot prices are seen at 98,700-100,300 yuan/mt.

Lead: LME lead traded rangebound and closed at $2382.5/mt last night, at one point hitting the lowest point of $2,371/mt. It is expected to reach $2,400/mt today and investors should pay attention to breaking news that might affect the market. SHFE lead lost the support of 20-day moving average and closed at 18,480 yuan/mt, down 70 yuan/mt. With significant resistance, SHFE lead is likely to trade in a weak rangebound today.

Tin: Base metals gained as the trade war eased and as the dollar performed weakly. Due to resistance, LME tin is expected to trade rangebound and test pressure at $21,300/mt today. Driven by its LME counterpart, SHFE tin went up at night and we see it trading rangebound at 144,000-146,000 yuan/mt today.

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