SMM Morning Comments (Sep 11)

SHANGHAI, Sep 11 (SMM) –

Copper: The impact from threats of a trade war lowered copper prices, but investors should remain cautious as little support is seen below. LME copper rose to a high of $5,900/mt as the US dollar weakened, and may hover around that level today. The SHFE 1811 contract closed at 47,660 yuan/mt after it rose to the highest last night at 47,770 yuan/mt. Imports will lower spot premiums further today, to a maximum of 50 yuan/mt. 

Aluminium: LME aluminium broke resistance at all moving averages and soared to a high of $2,109/mt, on market talk that Rusal is likely to cut production this month. A downbeat macroeconomic sentiment closed LME aluminium around the 20-day moving average, at $2,077/mt. Open interests rose 2,521 lot to 675,000 lots. The SHFE 1811 contract increased at a slower rate on market talk that China may ease production curbs in the upcoming heating season. However, potential cutbacks at Rusal will continue to bolster prices in the short run. The contract is seen trading at 14,750-14,850 yuan/mt today with its LME counterpart at $2,080-2,110/mt. Spot offers are set at a discount of 30 yuan/mt to a premium of 10 yuan/mt. 

Zinc: LME zinc plunged to close at $2,363/mt on Monday. While LME inventory continued to shrink, moving averages above created strong resistance. LME zinc is likely to trade under pressure today with a trading range of $2,360-2,410/mt. The SHFE 1811 contract opened higher but fell overnight to end in negative territory at 20,450 yuan/mt. Limited cargoes for delivery might provide some support to SHFE zinc prices, but resistance at moving averages remains strong. We expect the contract to trade rangebound at the middle Bollinger band today with a trading range of 20,400-20,900 yuan/mt.

Nickel: Positive fundamentals pulled LME nickel and the SHFE 1811 contract to close slightly higher overnight, as inventories declined quickly in the spot markets. With the lingering threat of US-China trade tariffs, we expect the contract to trade at 101,500-103,000 yuan/mt today with LME nickel at $12,400/mt. Spot prices are seen at 101,500-108,000 yuan/mt. 

Lead: After it rose to a high of $2,085/mt, LME lead lost all the gains at closing on market concerns of escalated trade conflict between China and the US. With pressure from several moving averages above, LME lead will retain its weak trend today. The SHFE 1810 contract lost support at the 19,000 yuan/mt level and fell to a low of 18,865 yuan/mt as its LME counterpart weakened. Market participants should monitor the development of the US-Sino trade dispute in the near run. 

Tin: LME tin traded weakly overnight as investors were cautious about the overall impact of potential US tariffs Chinese goods. The SHFE 1901 contract stopped rising at 145,600 yuan/mt, and closed slightly higher at 144,990 yuan/mt. Trades fell in the second half of the night. Supplies in the spot market were sufficient as the delivery date for the SHFE 1809 contract approached.