SMM Morning Comments (Apr 24)

SHANGHAI, Apr 24 (SMM) –

Copper: LME copper fell amid the weak performance across the nonferrous complex as the US signalled it could ease sanctions against Rusal. The contract struggled between several moving averages but stood above the 10-day moving average. The SHFE 1806 contract was dragged by its LME counterpart. We expect it to trade at 51,000-51,600 yuan/mt today with LME copper at $6,900-6,970/mt. Spot premiums are seen higher at 260-310 yuan/mt as sellers are keen to offer high.

Aluminium: LME aluminium tumbled to a low of $2,237/mt and lost the gains over the past seven trading days following the US Treasury Department’s announcement to extend the time limit for US and non-US citizens to wind up business with Rusal. We expect LME aluminium to remain weak in the near term and test support at the 20-day moving average with a trading range of $2,170-2,270/mt. Dragged by its LME counterpart, the SHFE 1806 contract hit a low of 14,220 yuan/mt before it regained some losses with shorts covering. We expect it to trade rangebound at 14,300-14,550 yuan/mt in the near term with spot premiums at 70-30 yuan/mt.

Zinc: LME zinc is expected to consolidate with a trading range at $3,205-3,255/mt today. SHFE zinc rose from the opening low as longs dominated the market overnight. Given the relatively strong anticipation of consumption in May, we expect it to consolidate between 24,100-24,600 yuan/mt today. 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: LME nickel dipped to a low of $13,830/mt overnight as the US dollar gained and as the sanctions against Russia may ease. It fell below the 10-day moving average but may seek support below. We see LME nickel trading rangebound with downward room and SHFE 1807 contract trading at 102,000-104,000 yuan/mt today. Spot prices are expected at 101,500-103,500 yuan/mt.

Lead: LME lead touched a low of $2,317/mt following the 10% and 6.5% tumble in LME aluminium and nickel prices, respectively. We expect it to continue its downward trend today and test the support at the $2,300/mt level. As macroeconomic developments significantly overshadowed the fundamentals, investors should remain cautious. The SHFE 1806 contract rebounded from a low of 18,240 yuan/mt after shorts took profits and exited the market. It then traded above the daily moving averages. We see the upward trend for the contract unchanged in the short term but with limited room as the pressure is relatively strong. However, we also expect it to fall today as the market has yet to fully react to the falls in LME nickel and aluminium.

Tin: LME tin was dragged down by a plunging LME aluminium overnight. It closed at $21,100/mt, $560/mt lower from the previous close. Investors would be cautious about it going down further. The SHFE 1809 contract was also weak and hit a low of 146,150 yuan/mt overnight. The SHFE/LME tin price ratio once rose to 7. We see the contract hovering at 145,000-148,000 yuan/mt in the short run and at 145,500-146,500 yuan/mt today.

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