SMM Morning Comments (Apr 23)

Published: Apr 23, 2018 09:46

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SMM Morning Comments

SHANGHAI, Apr 23 (SMM) –

Copper: LME copper stood above all the moving averages but pressure remained at the $7,000/mt level. The SHFE 1806 contract regained losses in the previous day and stayed above the 40-day moving average. We expect LME copper to trade at $6,950-7,000/mt today and the SHFE 1806 contract to trade at 51,300-51,800 yuan/mt. Spot premiums are seen narrower at 220-270 yuan/mt as prices of futures rebound.

Aluminium: Given the US sanctions on Rusal and the anticipated production cut, LME aluminium technically retained its upward trend but with weaker momentum. We expect it to trade at highs between $2,435-2,525/mt today. We will also look out for the support at the five-day moving average. The SHFE 1806 contract touched a low of 14,825 yuan/mt as more shorts entered the market but support from longs stayed. The SHFE/LME ratio returned to around six. We see support at the 10-day moving average and expect it to trade at 14,725-14,925 yuan/mt today. Spot discounts are seen at 50-10 yuan/mt.

Zinc: As geopolitical tension cooled, LME and SHFE zinc moved within a wide range. LME zinc failed to stand firmly above $3,250/mt, and we expect it to trade between the 20- and 40-day moving averages at $3,230-3,275/mt. SHFE zinc rose from lows as shorts and longs diverged. Such sentiment may continue today with the trading range for the SHFE 1806 contract at 24,200-24,650 yuan/mt. The 0# common brands are likely to trade at premiums of 190-240 yuan/mt against the 1805 contract, with Shuangyan at premiums of 200-250 yuan/mt.

Nickel: The trading level of the SHFE 1807 contract fell before it rebounded as longs added their positions and shorts cut theirs. With limited support from fundamentals, we expect LME nickel to consolidate at highs today. The SHFE 1807 contract is likely to trade at 103,300-105,000 yuan/mt with spot prices at 103,000-104,600 yuan/mt.

Lead: Last Friday, LME lead lost the gains during the day with pressure from shorts as inventories rose and LME zinc dipped. We see it hovering around $2,350/mt today with apparent pressure above. The SHFE 1806 lead contract gained support after being dragged down by LME lead to a low of 18,305 yuan/mt last Friday. We see it testing support at the five-day moving average today.

Tin: LME tin registered six consecutive days of gains last Friday night with the highest price at $21,700/mt. Despite US sanctions against Russia, LME tin is likely to be little affected and to rise further in the short term. The SHFE 1809 contract is expected to trade rangebound for a few days due to a tight supply of raw materials and sluggish demand. It is likely to trade at 146,000-150,000 yuan/mt in the short term and at 148,000-149,000 yuan/mt 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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