SMM Morning Comments (Mar 30)

SHANGHAI, Mar 30 (SMM) –

Copper: Copper prices rebounded as concerns of a trade war cooled. LME copper stood above the five-day moving average and tested the 10-day moving average, with its KDJ indicator extending upwards. SHFE copper performed similarly, and stablised at a low level with strong pressure. As the LME is closed today, we expect the SHFE 1805 contract to trade at 49,700-50,200 yuan/mt, with spot discounts at 170-120 yuan/mt.

Aluminium: As the inventory of LME aluminium ingots grew by 24,675 mt, LME aluminium dipped sharply to $1,996/mt overnight, a record low from August 2017. Affected by weak LME aluminium, SHFE aluminium also edged down and closed at 13,705 yuan/mt overnight. But we expect the gradual recovery of domestic consumption to support the prices. It is likely to trade rangebound at 13,650-13,850 yuan/mt with spot discounts at 100-60 yuan/mt today.

Zinc: LME zinc came off from highs with poor upward momentum overnight and hovered around the five-, 10- and 20-day moving averages now. We see such rangebound pattern extending, with no further downward room for it. The $3,300/mt level remains its short-term target. SHFE zinc failed to break the 20-day moving average and fell to between the 20- and five-day moving averages, away from the 25,000 yuan/mt level. We expect it to stay rangebound for more cues during the day, and trade at 24,600-25,000 yuan/mt. The 0# common brand will trade at a discount of 20 yuan/mt to a premium of 20 yuan/mt and Shuangyan brand will trade at a discount of 10 yuan/mt to a premium of 30 yuan/mt.

Nickel: Overnight, base metals were mostly driven by China's value-added tax reform. Inventories of LME nickel continued to drop as prices rose to a high of $13,415/mt near closing. SHFE nickel is likely to face resistance from sluggish consumption. We see the SHFE 1807 contract trading at 97,000-99,000 yuan/mt today with spot prices at 96,500-98,500 yuan/mt.

Tin: As the US dollar weakened, LME tin climbed overnight and traded with support at $20,900/mt and resistance at $21,400/mt. SHFE tin also grew with support at five-day moving average overnight. Prices hit a high of 142,840 yuan/mt around the 10-day moving average. As tin ore imported from Myanmar is likely to decline, we expect SHFE tin to trade at 142,000-143,000 yuan/mt today.

Lead: LME lead edged down and dropped to a low of $2375.5/mt with pressure from shorts overnight. The SHFE gained support at 18,550 yuan/mt after touching a low of 18,565 yuan/mt as LME lead weakened. We see it staying rangebound with support at 18,500 yuan/mt today.

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