SMM Morning Comments (Feb 28)

Published: Feb 28, 2018 10:09

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SMM Morning Comments

SHANGHAI, Feb 28 (SMM) -

Copper: A stronger US dollar drove LME copper lower towards the 60-day moving average, but prices are likely to rise in the medium term as downstream consumption recovers and Chinese scrap imports decline. We see LME copper to trade at $7,000-7,070/mt and the SHFE 1804 contract at 52,500-53,100 yuan/mt today. Spot discounts are seen getting smaller as sellers held up.

Aluminium: We expect LME aluminium to stay firm and trade at $2,140-2,167/mt today, as the growth of LME inventory halted. The SHFE aluminium contract is expected to be rangebound around the five- and 10-day moving averages, trading at 14,200-14,400 yuan/mt. Spot discounts are seen at 220-180 yuan/mt.

Zinc: We see LME zinc to consolidate at highs while pressure remains on base metals in general from US Federal Reserve chair Jerome Powell’s testimony. LME zinc is expected to trade at $3,465-3,515/mt today, with SHFE zinc at 26,250-26,700 yuan/mt. In the physical market, the 0# common brand is set to trade at a discount of 100-80 yuan/mt and Shuangyan brand is set to trade at a discount of 70-40 yuan/mt.

Nickel: Tight supply of nickel pig iron and a slight rise in ore prices would give support to nickel, as we expect the SHFE 1805 contract to trade at 103,800-105,800 yuan/mt today. Spot prices are expected at 103,000-105,000 yuan/mt.

Tin: We expect LME tin to remain rangebound with support at $21,000/mt today and SHFE tin to trade at 147,000-148,500 yuan/mt with resistance from moving averages. In the physical market, spot prices are seen to trade at 145,500-147,500 yuan/mt with high inventories.

Lead: The stronger US dollar gave pressure to LME lead, which stayed around the five- and 60-day moving averages overnight. We expect it to test the support at the 60-day moving average level. SHFE lead performed no better and touched the support at the five- and 20-day moving averages. We expect it to continue to test the support levels today.

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Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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