SMM Morning Comments (Feb 5)

SHANGHAI, Feb 5 (SMM) –

Copper: Better-than-expected nonfarm payrolls in the US boosted the dollar but we expect the greenback to be weaker in the longer term, which is bullish for copper prices. While weaker physical consumption in the near term could drag down copper prices, a major Chinese fund has long positions further down the curve. We see SHFE copper firmly supported at the 52,500-53,000 yuan/mt level with spot discounts at 80-30 yuan/mt today.

Aluminium: LME aluminium is expected to be rangebound at $2,210-2,240/mt today whereas the SHFE contract is set to trade at 14,250-14,450 yuan/mt. Spot discounts are seen stable at 140-100 yuan/mt.

Nickel: Sluggish stainless steel consumption is expected to keep nickel prices under pressure today. The SHFE 1805 nickel contract is expected to trade at 101,000-103,500 yuan/mt with spot prices at 100,200-102,500 yuan/mt.

Zinc: LME zinc may have been under pressure following a shift on the macroeconomic level, but we see firm fundamentals as inventories continued to go lower. We see support at $3,500/mt while its Chinese counterpart is set to trade at 26,500-26,950 yuan/mt today. In the spot market, the 0# common brand is expected to trade at discounts of 100-70 yuan/mt today and the Shuangyan brand at discounts of 70-40 yuan/mt.

Tin: While LME tin sees support at $21,200/mt today, the SHFE tin is set to trade at 147,500-149,500 yuan/mt. Physical trading is set to be thin with spot prices at 146,500-148,500 yuan/mt.

Lead: SHFE lead sees pressure at the 19,800 yuan/mt level as physical trading becomes limited ahead of Chinese New Year. We expect the spot market to trade at 19,550-19,700 yuan/mt today.

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