SMM Morning Comments (Mar 29)

Published: Mar 29, 2018 09:31

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SMM Morning Comments

SHANGHAI, Mar 29 (SMM) –

Copper: A stronger US dollar and falling oil prices are likely to keep copper prices under pressure. We expect LME copper to trade at $6,640-6,690/mt today and the SHFE 1805 contract at 49,400-49,900 yuan/mt. Spot discounts are expected at 200-140 yuan/mt.

Aluminium: A total of 18,000 lots of short positions were added to SHFE aluminium at the start of the trading session last night but prices did not fall as much as expected. However, bearish sentiments remained and a narrowed spread indicates a potential shift from contango to backwardation. We expect the main SHFE aluminium contract to trade at 13,640-13,820 yuan/mt today and spot discounts at 130-90 yuan/mt. LME aluminum is expected to trade at $2,020-2,043/mt.

Zinc: The five- and 10-day moving averages gave some support to SHFE zinc last night though investors added to their short bets aggressively. We see pressure at the 20-day moving average, or 25,000 yuan/mt, and expect the contract to trade at 24,600-25,100 yuan/mt today. LME zinc also saw support at the 20-day moving average and is expected to trade at $3,250-3,300/mt today.

Nickel: Market sentiment was supported last night with the release of favourable US economic data. LME nickel stood above the five-day moving average but we see pressure remaining. The SHFE 1805 contract is expected to trade at 96,000-98,000 yuan/mt today with spot prices at 95,500-97,500 yuan/mt.

Lead: SHFE lead registered gains with the support of its LME counterpart. We expect it to test and hit 18,700 yuan/mt today but upward momentum may not be sustainable.

Tin: With the US dollar index edging back up to 90, we expect LME tin to be rangebound with support at $20,600/mt. SHFE tin is set to test the support at 140,000 yuan/mt in the short term but we see limited downward room. Smelters in China have held up their prices as tight supplies of raw materials are not expected to ease in April.

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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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