SMM Morning Comments (Apr 16)

SHANGHAI, Apr 16 (SMM) –

Copper: LME copper rose and hit the five-day moving average but faced pressure at the 10-day moving average, as KDJ indicator extended downwards last Friday night. The SHFE 1806 contract mostly traded below all moving averages, and touched the joint of five- 10-, and 20- day moving averages with apparent pressure. The copper market was generally sluggish given unfavourable macroeconomic factors. We expect LME copper to trade at $6,780-6,850/mt with SHFE copper at 50,000-50,500 yuan/mt today. As futures prices decline, spot premiums are likely stand higher at 50-100 yuan/mt.

Aluminium: We expect LME aluminium to trade rangebound at a relatively high level of $2,260-2,295/mt today. Despite the US sanctions on Rusal, a record low SHFE/LME aluminium price ratio is likely to boost China’s aluminium exports and offset the global dip in supply. SHFE aluminium hit a low of 14,490 yuan/mt last Friday due to weak fundamentals and is expected to trade at 14,350-14,550 yuan/mt today. Spot discounts are expected to be 80-40 yuan/mt.

Zinc: LME zinc attempted to climb twice but met resistance at $3,140/mt last Friday night as tension in Syria intensified. We expect investors to be cautious in the near term as SHFE zinc slumped last Thursday. LME zinc is seen trading at $3,080-3,130/mt today. SHFE zinc hovered at 24,800 yuan/mt with pressure last Friday night, and the contract is likely to trade rangebound at 23,200-23,700 yuan/mt today.

Nickel: As global nickel inventories declined steadily, LME nickel climbed above several moving averages last Friday night. It is likely to hover at high levels today. The SHFE 1807 contract is seen trading at 102,000-104,000 yuan/mt with spot prices at 101,500-103,500 yuan/mt today. Investors will take more cues from the US sales data in March and the situation in Syria.

Tin: LME tin remained under pressure and closed beneath several moving averages. We expect it to stay rangebound today with support at $20,600/mt. SHFE tin failed to carry over its upward momentum during the day on Friday night, and traded rangebound at low levels and under moving averages. We expect it to trade at 142,500-144,000 yuan/mt today. In the physical market, the rangebound tendency among futures is likely to limit any upward movement of spot prices. We see them trading at 143,000-144,500 yuan/mt today as smelters hold back from selling.

Lead: As tension in Syria heightened, LME lead registered two consecutive days of losses and is expected to test support at $2,300/mt today. SHFE lead saw support at 18,000 yuan/mt and traded at 18,000-18,300 yuan/mt. Given the strong pressure seen under the moving averages, we expect it to stay rangebound today. Investors should look out for the main contract switching to the 1806 contract.

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