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SMM Morning Comments (Mar 22)

iconMar 22, 2018 09:38
SMM Morning Comments

SHANGHAI, Mar 22 (SMM) –

Copper: LME copper rebounded from the $6,700/mt level overnight as long positions entered the market. Copper prices are expected to rebound if China's economic data remain strong and the global bearish sentiment eases. We see LME copper trading at $6,800-6,860/mt today, with the SHFE 1805 contract trading at 51,000-51,600 yuan/mt. Spot discounts are seen smaller at 200-140 yuan/mt.

Aluminium: LME aluminium met resistance at the 10-day moving average and lacked strong support overnight. We see it trading rangebound with downward pressure at $2,065-2,095/mt today. SHFE aluminium hit a high of 13,915 yuan/mt as investors covered their shorts last night. We expect it to trade at 13,820-14,000 yuan/mt with spot prices at a discount of 140-100 yuan/mt today. Investors will take cues from changes in inventory today.

Zinc: Buoyed by macroeconomic factors, LME zinc rebounded overnight and closed at a high of $3,259/mt. We expect it to trade rangebound at $3,225-3,275/mt today. As investors added their long bets, SHFE zinc also climbed up overnight and touched a high of 24,815 yuan/mt. The upward trend is unlikely to continue as investors may wish to maintain a short position. We expect prices to be rangebound at 24,500-25,000 yuan/mt today. 

Nickel: With support at the 60-day moving average, the prices of nickel rebounded after the US dollar fell below 90 last night. We see LME nickel trading rangebound with the SHFE 1805 contract trading at 100,800-102,500 yuan/mt today. Spot prices are seen at 100,300-102,000 yuan/mt. 

Tin: The strong performance of LME metals buoyed SHFE tin to stand above the five-day moving average overnight. As the Federal Reserve anticipates hiking interest rates three times in 2018, the weaker US dollar is set to support prices of base metals. We expect SHFE tin to trade between the five- and 10-day moving averages at 144,000-145,000 yuan/mt today. LME tin will find support at the $20,600/mt level and face resistance at the 60-day moving average. In the physical market, spot prices are seen at 143,000-145,000 yuan/mt with support from rising prices of futures.

Lead: Both LME and SHFE lead jumped and avoided a downward momentum overnight. We expect LME lead to trade rangebound while SHFE lead tests support at the 18,500 yuan/mt level today.


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