SMM Morning Comments (Aug 15)

SHANGHAI, Aug 15 (SMM) –

Copper: London and Shanghai copper traded rangebound at lows overnight. Three-month LME copper hovered around $5,760/mt, while the most active SHFE October contract opened lower at 46,400 yuan/mt and ended at 46,490 yuan/mt. Open interest for the SHFE copper complex expanded by 5,200 lots, as shorts loaded up their positions. Weak economic data from China and Germany, and waning optimism about US-China trade talks will weigh on copper prices. LME copper is expected to trade between $5,740-5,780/mt today, with SHFE copper at 46,200-46,600 yuan/mt. Spot premiums are seen at 60-120 yuan/mt.

Aluminium: Three-month LME aluminium slipped to an intraday low of $1,769/mt, before it rallied to end the day a tad lower at $1,784.5/mt. It is expected to trade between $1,760-1,850/mt today. The most traded SHFE October contract fluctuated to end 0.28% higher at 14,200 yuan/mt overnight, with open interest expanding 5,118 lots to 309,000 lots as longs added their positions. SHFE aluminium is unlikely to extend its gains, as demand has yet to reach a high-season level. It is expected to trade rangebound in the short run, and to trade between 14,000-14,200 yuan/mt today. Spot prices are seen in a discount of 20 yuan/mt to a premium of 20 yuan/mt.   

Zinc: As market focus returned to weak fundamentals, three-month LME zinc on Wednesday reversed the previous day’s gains on developments in US-China trade dispute. The contract lost 2.49% to end at $2,272.5/mt. Contango on LME zinc and smaller-than-expected declines in LME zinc inventories all pointed to a possible supply surplus. LME zinc is expected to trade between $2,250-2,300/mt today. The most active SHFE October contract failed to recover from a lower open overnight, declining 0.96% to close at 18,620 yuan/mt. The spread between the September and October contracts widened to 100 yuan/mt, suggesting market expectations for higher inventories. With strong bearish sentiment, SHFE zinc is expected to trade between 18,400-18,900 yuan/mt today.  

Nickel: Three-month LME nickel erased all its earlier gains to an intraday low of $15,480/mt, before it rebounded to end the day 0.92% higher at $15,895/mt. LME nickel managed to hold above the five-day moving average. Support from that level and resistance from $16,000/mt will come under scrutiny today. The most traded SHFE October contract tumbled to a low of 121,400 yuan/mt in early trade overnight, before it clawed back all those losses to close 0.16% higher at 123,580 yuan/mt. Whether SHFE nickel could remain above the 10-day moving average is crucial to watch today.

Lead: Three-month LME lead fell to an intraday low of $2,028.5/mt, before it recovered some ground to end its trading day 0.97% lower at $2,049.5/mt. This suggested strong support from the 20-day moving average. LME lead is now locked in rangebound trade. The most active SHFE September contract saw its losses accelerated shortly before closing overnight, shedding 0.84% to end at the session low of 16,530 yuan/mt. SHFE lead has fallen below the 20-day moving average, which grew the risks of further declines.

Tin: Three-month LME tin weakened to an intraday low of $16,965/mt, before it recovered some ground to end 0.15% lower at $17,095/mt. Support from the five- and 10-day moving averages helped LME tin. Support is seen at $16,500/mt, while resistance is at a previous high of $17,200/mt. The most traded SHFE September contract slipped to a low of 133,590 yuan/mt overnight, before it pared some losses to end 0.42% lower at 133,850 yuan/mt. Support is seen at 132,000 yuan/mt, while resistance is at 134,500 yuan/mt where are the five-20 day moving averages.