SMM Morning Comments (Mar 21)

Published: Mar 21, 2018 09:30

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SMM Morning Comments

SHANGHAI, Mar 21 (SMM) –

Copper: Copper prices remained under pressure given high inventories and worries of a potential trade war. We expect LME copper to fall to the $6,700/mt level in the short term but with upward momentum in the mid and long term. We see it trading at $6,730-6,790/mt today, with the SHFE 1805contract trading at 50,500-51,000 yuan/mt. In the physical market, downstream consumers may increase purchases as prices of futures decline. Spot discounts are seen at 200-150 yuan/mt today.

Aluminium: LME aluminium continued to consolidate and is expected to trade at $2,070-2,095/mt today. The Federal Reserve’s decision on an interest rate hike will give more guidance to the market. We expect SHFE aluminium to trade at 13,900-14,050 yuan/mt today, with spot discounts at 160-120 yuan/mt.

Zinc: A stronger US dollar index and pressure from shorts drove LME zinc below $3,200/mt overnight. It is seen trading at $3,185-3,235/mt today. Overnight, SHFE zinc fell to a record low this year, at 24,325 yuan/mt with resistance from short bets. Given accumulated inventories and sluggish consumption, we see it testing support at 24500 yuan/mt and trading at 24,300-24,750 yuan/mt today.

Nickel: As downstream demand remained sluggish and the US dollar is likely to gain further, nickel prices faced downward pressure and fell below the 40-day moving average. We expect LME nickel to remain rangebound today and the SHFE 1805 contract to trade at 100,800-102,500 yuan/mt. Spot prices are seen at 100,300-102,000 yuan/mt.

Tin: As the US dollar strengthen and rose back to 90, LME tin edged down last night and hit a low of $20,670/mt. As the US dollar is likely to be buoyed by a higher interest rate, we expect LME tin to drop further and test support at $20,600/mt in the short term. Overnight, SHFE tin mostly traded rangebound below the five-day moving average. It also faces downward pressure in the short term. We expect it to test support at 143,000 yuan/mt, and trade at 143,500-144,500 yuan/mt today.

Lead: LME lead touched a low of $2,320/mt, but gained some lost ground to close at $2350.5/mt. We see prices declining further and testing support at $2310/mt today. SHFE lead tried to rise above 18,250 yuan/mt but faced resistance overnight. We see it trading rangebound with downward room today.

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copper aluminium nickel zinc lead tin

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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