SMM Morning Comments (Mar 1)

SHANGHAI, Mar 1 (SMM) -

Copper: LME copper lost support at the $7,000/mt level and SHFE copper fell to a low of 52,380 yuan/mt overnight as the US dollar remained strong. With pressure on base metals, we see copper staying rangebound in the short term with possible upward room in the medium term. We expect LME copper to trade at $6,900-6,970/mt and the SHFE 1804 contract to trade at 52,000-52,700 yuan/mt today. Spot discounts are seen smaller at 180-120 yuan/mt with downstream consumers stocking.

Aluminium: LME aluminium came under pressure from the strong US dollar and fell to a low of $2,129/mt overnight while SHFE aluminium hit a high of 14,415 yuan/mt as investors covered their shorts. We expect SHFE aluminium to trade at 14,250-14,450 yuan/mt as investors turn bullish in anticipation of higher consumption. Spot discounts are seen at 180-140 yuan/mt.

Zinc: LME zinc lost support at the 40-day moving average and remained weak. We see it trading at $3,440-3,490/mt today. SHFE zinc dropped to the ranges of the 10- and 40-day moving averages and is likely to trade at 26,150-26,600 yuan/mt with high inventories today. In the physical market, the 0# common brand is set to trade at a discount of 110-90 yuan/mt and Shuangyan brand is set to trade at a discount of 80-60 yuan/mt.

Nickel: LME nickel faces resistance and is expected to edge down, after gains in the US dollar and the release of lacklustre economic data from China. The SHFE 1805 contract will trade at 103,800-105,300 yuan/mt today. Spot prices are expected at 103,000-104,600 yuan/mt.

Lead: SHFE lead lost support from all moving averages under pressure from weak Purchasing Managers' Index data in China and a slump in LME lead. We expect it to trade rangebound and test support at 19,000 yuan/mt today.

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