SMM Morning Comments (Apr 18)

Published: Apr 18, 2018 09:36

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SMM Morning Comments

SHANGHAI, Apr 18 (SMM) –

Copper: LME copper fell with higher trading levels. Technically, it struggled among the moving averages as longs significantly reduced their positions. Affected by its LME counterpart, the SHFE 1806 contract saw a lower trading level and moved rangebound. It stood above the 20-day moving average, away from the 40-day moving average. We expect LME copper to trade at $6,860-6,930/mt today, and the SHFE 1806 contract to trade at 50,500-51,000 yuan/mt. In the physical market, trading turned brisk yesterday afternoon. Cargo holders continued to offer high as prices of futures declined. Spot premiums are seen at 250-300 yuan/mt today.

Aluminium: LME aluminium rebounded and closed at $2,411/mt after it dipped to a low of $2,346/mt as the ZEW eurozone economic sentiment indicator fell short of expectations overnight. We expect it to remain at high levels in the short run due to US sanctions on Russian aluminium giant Rusal. It is likely to trade at $2,389-2,470/mt today. Buoyed by LME aluminium, SHFE aluminium also gained overnight. The latter is likely to test resistance at 15,000 yuan/mt and trade at 14,800-15,000 yuan/mt today. Spot discounts are seen at 70-30 yuan/mt.

Zinc: Amid a relatively optimistic sentiment, LME zinc broke the pressure from five-day moving average overnight as the US-Russia trade conflict eased. It is expected to test pressure at 10-day moving average and trade at $3,140-3,190/mt today. SHFE zinc also gained overnight but gains were less significant than LME zinc. The SHFE 1806 contract rose to a high of 23,935 yuan/mt near closing overnight with support from longs. We expect investors to cover their shorts further if the contract stands above 24,000 yuan/mt today. It is seen trading at 23,600-24,100 yuan/mt.

Nickel: As global inventories shrank, LME nickel moved above the moving averages overnight. We expect it to trade strongly rangebound today, with the SHFE 1807 contract at 102,500-104,300 yuan/mt. Spot prices are seen at 102,000-103,800 yuan/mt.

Tin: LME tin broke resistance from all moving averages overnight as China’s strong economic data and a weak US dollar buoyed most base metals. It is likely to rise further to $21,800/mt in the short term. The SHFE 1805 contract climbed up steadily and closed above the 40-day moving average overnight. It is likely to remain robust with a target above 146,000 yuan/mt in the short run. It is likely to trade at 145,000-146,000 yuan/mt today.

Lead: LME lead closed slightly higher overnight but maintained its downward trend. We see limited upward momentum for it in the short term and expect it to continue to consolidate today. SHFE lead performed similarly. We also see strong upward pressure for it in the short term and expect it to consolidate around the five-day moving average today.

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copper aluminium nickel zinc lead tin

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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