SMM Morning Comments (Mar 16)

SHANGHAI, Mar 16 (SMM) –

Copper: LME copper dipped under pressure from the strong dollar, but the pressure is expected to ease as the Federal Reserve's interest rates hike in March will weaken the upward momentum of US dollar. We see copper prices remaining rangebound in the short term while rising in the long term in anticipation of the destocking period. We expect LME copper to trade at $6,900-6,950/mt today, with SHFE copper at 51,850-52,300 yuan/mt. Spot discounts are seen at 200-100 yuan/mt.

Aluminium: As exports from China increased and the US dollar strengthened, LME aluminium saw weaker performance than its SHFE counterpart and is expected to remain rangebound at lows and trade at $2,075-2,100/mt today. We see the SHFE contract continue to hover around the five-day moving average and 14,000 yuan/mt, with a trading range of 13,900-14,050 yuan/mt. Spot discounts are seen wider to 200-160 yuan/mt.

Zinc: LME zinc traded mostly rangebound overnight, and rose to a high of $3,245/mt as the growth of inventories halted. We expect it to continue to trade rangebound at $3,200-3,250/mt today. SHFE zinc also hovered at a broad range last night. As consumption recovers slowly, we expect the prices to trade at 24,600-25,050 yuan/mt today with resistance at 25,000 yuan/mt.

Nickel: With pressure from a stronger US dollar and a potential trade war, LME nickel will trade rangebound with downward room today. SHFE nickel will be supported by the steadily declining inventory in the short term. We see the SHFE 1805 contract trading at 102,000-104,000 yuan/mt today, with spot prices at 101,500-103,300 yuan/mt. 

Tin: SHFE tin fell to a low of 143,550 yuan/mt at one point overnight. We see it remaining weak and trading at 143,500-145,000 yuan/mt today, with LME tin trading rangebound and supported at the $20,400/mt level. Spot prices are seen at 143,500-145,000 yuan/mt.

Lead: As the US dollar rose back to 90, LME lead faced pressure and fell to a low of $2374.5/mt overnight. We expect it to trade rangebound at the ten-day moving average and test $2,400/mt. SHFE lead inched up last night and also hovered around the ten-day moving average. We expect it to continue the trend with limited support from long bets. 

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