SMM Morning Comments (Apr 13)

Published: Apr 13, 2018 09:36 (GMT+8)

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SMM Morning Comments

SHANGHAI, Apr 13 (SMM) –

Copper: As zinc prices tumbled, copper prices declined sharply. LME copper fell 1.31% and the SHFE 1806 contract dipped 0.94% overnight. In the technical aspect, LME copper struggled among the moving averages overnight and opened at the joint of the 10- and 20-day moving averages today as the KDJ indicator expanded downwards. The SHFE 1806 contract moved under all moving averages overnight. We expect LME copper to trade at $6,780-6,840/mt and SHFE copper to trade at 50,000-50,500 yuan/mt today. In the physical market, spot premiums are seen higher at 30-80 yuan/mt as futures declined.

Aluminium: US sanctions on Russia buoyed LME aluminium as investors added their long bets overnight. This followed after prices fell to a low of $2,203/mt under pressure from a higher US dollar as LME aluminium inventories surged 90,000 mt to 1.25 million mt. We see LME aluminium continue to stay robust and trade at $2,275-2,315/mt today. SHFE aluminium also gained together with LME aluminium but at a lower speed overnight. We expect it to face pressure from fundamentals in the mid term. It is likely to trade at 14,400-14,600 yuan/mt with spot discounts at 100-60 yuan/mt today.

Zinc: LME zinc lost all daily technical support with weekly indicators headed towards support at the 60-day moving average. It rebounded and struggled at the $3,100/mt level without upward momentum. We expect it to trade at $3,080-3,130/mt today. SHFE zinc fell and closed lower under pressure from shorts overnight. Although some longs bought at low levels, it still failed to avoid the decline. We expect it to trade at 23,150-23,650 yuan/mt given a lack of upbeat news. The 0# common brand is likely to trade at a premium of 100-140 yuan/mt against SHFE 1805 contract while the Shuangyan brand trades at a premium of 110-150 yuan/mt.

Nickel: LME nickel traded rangebound and closed at $13,770/mt overnight. As the Syrian political situation eased and the dollar performed strongly, SHFE nickel climbed up and closed at 101,850 yuan/mt overnight. Investors should monitor China's social financing today. Dragged by the pressure from weak prices of stainless steel, the SHFE 1807 contract is expected to trade at 101,000-102,500 yuan/mt with spot prices at 100,500-102,000 yuan/mt today.

Tin: As the US dollar gained slightly from eased tension in the Middle East, LME tin edged down and traded mostly below moving averages. We continue to see downward room with support at $20,600/mt today. SHFE tin also hovered at low levels overnight. It is likely to trade at 142,000-143,500 yuan/mt today.

Lead: With LME zinc's slump and the unpredictability in Syria, LME lead registered a loss overnight. London's poor performance weighed down its Shanghai counterpart. The SHFE 1805 contract closed with a loss overnight after it declined for seven consecutive days. We see it trading rangebound to recover part of the losses today.

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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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