SMM Morning Comments (Sep 12)

SHANGHAI, Sep 12 (SMM) – 

Copper: Prices of copper fell last night, pressured by a higher greenback on an unexpected increase in US producer price data. Trade uncertainties and limited improvement in global economic weakness will constrain any upside potential for copper prices in the near term. Three-month LME copper shed 0.5% last night to close at $5,780/mt, with its SHFE counterpart ending down 0.25% at 47,110 yuan/mt. Pressure from the five-day moving average and a lack of technical support may keep the SHFE November contract between 46,900-47,400 yuan/mt today, with LME copper at $5,770-5,820/mt. Spot premiums will be firm at 110-140 yuan/mt on the last trading day before the mid-autumn festival holiday. 

Aluminium: Three-month LME aluminium came off from highs as shorts added their positions. It pared gains from the previous two sessions, losing 0.27% to close at $1,816.5/mt. However, loaded-up longs buoyed the most-traded SHFE November contract to highs around 14,470 yuan/mt, before it retreated to end slightly higher on the day at 14,415 yuan/mt. Further declines in domestic primary aluminium inventories may support it at 14,350-14,500 yuan/mt today, with LME aluminium trading between $1,770-1,820/mt. 

Zinc: Bullish longs on falling LME zinc inventories drove three-month LME zinc to close higher for the second consecutive trading day, as it ended up 0.5% at $2,355/mt. Fundamentals may support it at $2,330-2,380/mt today. The most-active SHFE November contract lost support from the Bollinger upper band as it came off from a high of 19,375 yuan/mt, to 19,180 yuan/mt. Sustained support from the five-day moving average settled it some 0.2% higher on the day at 19,175 yuan/mt. Expectations of near-term supply recovery may cap any upward momentum in prices, and keep them between 19,000-19,500 yuan/mt today. 

Nickel: Three-month LME nickel extended losses from the previous session even as it rebounded after fell to around the five-day moving average, closing down 0.5% at $17,860/mt. Support from the five- and 10- day moving averages should be monitored today. The most-active SHFE contract slipped after traded within a narrow band around the daily moving average. The five-day moving average, or the 142,200 yuan/mt level prevented it from dipping further and settled it 0.24% lower at 142,980 yuan/mt. Today, the contract will continue to test support from the five-day moving average. 

Lead: Three-month LME lead relinquished gains after it recovered from a low of $2,076/mt to hit a high of $2,109/mt, ending down 0.6% at $2,077.5/mt. Pressure remained heavy from the $2,100/mt level. The most-liquid SHFE October contract consolidated around 17,380 yuan/mt and finished 0.12% higher at 17,410 yuan/mt. Near-term price trend could be determined by the strictness of potential further environmental restrictions. 

Tin: A buildup of longs lifted the most-active SHFE 2001 contract steeply to a high of 142,360 yuan/mt, after it opened at 140,110 yuan/mt and bottomed out at 139,500 yuan/mt. It closed 1,900 yuan/mt higher on the day at 141,750 yuan/mt, with pressure above expected at 142,500 yuan/mt today. Three-month LME tin hovered within a tight range around the opening level of $17,325/mt, before it followed its SHFE counterpart to jump to a high of $17,750/mt, closing up $170/mt at $17,595/mt. Resistance above is likely at $18,000/mt.