SMM Morning Comments (Feb 28)

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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