SMM Morning Comments (Mar 14)

SHANGHAI, Mar 14 (SMM) –

Copper: LME copper inched up and hit a high of $6,959/mt last night. SHFE copper also rose and touched a high of 52,140 yuan/mt overnight. The strong US Consumer Price Index (CPI) and a weak US dollar are likely to support prices. We see SHFE copper trading at 51,000-54,000 yuan/mt. In the physical market, spot prices are likely to trade at a premium of 20-80 yuan today.

Aluminium: LME aluminium met resistance at the five-day moving average and support at $2,100/mt last night. We expect it to trade at $2,095-2,115/mt today. SHFE aluminium met resistance at 13,970 yuan/mt overnight as investors cut their long positions. Prices will continue to face pressure in the short term unless there is support from downstream demand or lower inventories. SHFE aluminium will trade at 13,800-13,980 yuan/mt today with spot discounts at 70-30 yuan/mt.

Zinc: With limited support from funds, LME zinc struggled to break the $3,300/mt level. We expect it to trade at $3,260-3,310/mt today. On expectations of a rebound in consumption, we see limited upward room for SHFE zinc given high social inventories. It will trade at 24,900-25,350 yuan/mt today. The 0# common brand will trade at a discount of 100-60 yuan/mt and Shuangyan brand will trade at a discount of 40-10 yuan/mt.

Nickel: LME nickel touched a high of $13,920/mt overnight as the US dollar weakened. Given lower inventories, we expect it to trade rangebound today with support from moving averages. China’s annual data of industrial value-add in January and February as well as the US’ producer price index (PPI) in February will give more guidance to the market today. We expect SHFE 1805 nickel contract to trade at 103,500-105,000 yuan/mt today, with spot prices at 103,000-104,300 yuan/mt.

Tin: Facing downward pressure from the US dollar, LME tin edged down last night with support at $21,000/mt. Prices will continue to face pressure in the short term. SHFE tin also dipped overnight and fell to a low at the 60-day moving average. We expect it to trade at 145,500-146,500 yuan/mt today with resistance.

Lead: LME rebounded overnight but met strong resistance from the 10-day moving average. SMM sees it trading rangebound between the five- and 10-day moving averages today. SHFE lead avoided a consecutive drop overnight. We expect it to test the 18,300 yuan/mt level and trade at 18,200-18,400 yuan/mt today.

For editorial queries, please contact Daisy Tseng at daisy@smm.cn 
For more information on how to access our research reports, please email service.en@smm.cn