SMM Morning Comments (Apr 20)

SHANGHAI, Apr 20 (SMM) –

Copper: As most base metals went down overnight, LME copper dipped from highs to close at $6,962/mt. Technically, it remained above the 60-day moving average and touched the upper Bollinger Band. SHFE copper hit the 40-day moving average above with the five- and 10-day moving average rising. We expect LME copper to trade at $6,930-6,980/mt and SHFE 1805 at 51,200-51,700 yuan/mt today. Lower future prices are set to boost trading activity, and we see spot premiums likely to stand at 220-280 yuan/mt.

Aluminium: A stronger SHFE aluminium suppressed its LME counterpart overnight due to uncertainties of China’s export tariff over refined aluminium. LME aluminium dipped to a low of $2,397/mt and tested support at the five-day moving average overnight amid an overall selloff sentiment. Though uncertainty remains, we see upward room and expect the contract to trade at $2,410-2,500/mt today. SHFE aluminium is also likely to go up to 14,900-15,100 yuan/mt today. Spot discounts are seen narrower at 50-10 yuan/mt.

Zinc: LME zinc attempted to rebound at the 20-day moving average but lacked strong support from fundamentals overnight. It dipped to close at $3,216/mt. Without any market cues to give direction, we see the prices hovering at $3,200-3,250/mt today. As investors took a cautious stance, SHFE zinc also edged down with pressure at the 20-day moving average. We see it trading at 24,050-24,550 yuan/mt today.

Nickel: Speculative trading was reduced overnight as concerns over more US sanctions eased. LME nickel came off from a high since December 2014 as China's stainless steel market remained oversupplied. We expect it to consolidate at highs today. The SHFE 1807 contract is expected to trade at 105,000-107,000 yuan/mt today with spot prices at 104,500-106,500 yuan/mt.

Tin: LME tin traded rangebound with a low towards the 60-day moving average overnight. We expect it to continue such rangebound pattern with support at $21,300/mt. The SHFE 1809 contract consolidated around the 60-day moving average overnight. We expect it to remain rangebound at 147,000-148,500 yuan/mt today. Spot prices are seen to stabilise given the rangebound futures prices, with a trading range at 145,000-146,500 yuan/mt.

Lead: LME lead dipped to a low at $2,325/mt overnight as prices of aluminium and nickel fell from highs. It is likely to trade rangebound today. SHFE lead mostly hovered around the five-day moving average after it was dragged down to a low of 18,140 yuan/mt by its weak LME counterpart. We see it testing support at the five-day moving average today.

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