SMM Morning Comments (Aug 21)

Published: Aug 21, 2018 09:53

Save

SMM Morning Comments

SHANGHAI, Aug 21 (SMM) –

Copper: As the dollar weakened, copper prices continued to rebound overnight with LME copper hitting a high of $6,033/mt. The SHFE 1810 contract rose to 48,470 yuan/mt and open interests for the SHFE copper contracts remained at some 600,000 lots. We expect copper prices to continue their rangebound and strong performance in the short term and LME copper to test the pressure at the 10-day moving average. LME copper is likely to trade at $5,980-6,040/mt today with the SHFE 1810 contract at 48,400-48,800 yuan/mt. Spot premiums are seen at 230-270 yuan/mt.

Aluminium: LME aluminium hit a high of $2,084.5/mt during the European session before it finished1.3% higher at $2,058.5/mt on Monday. We expect LME aluminium to trade at $2,050-2,070/mt today. The SHFE 1810 contract opened higher and rose to a high of 14,710 yuan/mt before it lost some early gains and closed at 14,645 yuan/mt overnight. Aluminium prices received a boost from the latest increase in National Aluminium Company (Nalco)’s alumina shipment price. We expect the SHFE 1810 contract to trade at 14,550-14,700 yuan/mt today with spot discounts at 70-30 yuan/mt.

Zinc: LME zinc came off from early highs and finished Monday 0.52% lower at $2,376/mt. It is likely to test the resistance at $2,400/mt again today with a trading range of $2,370-2,420/mt. The SHFE 1810 contract opened lower but rose to a high of 20,250 yuan/mt overnight as longs added their positions and as shorts covered their positions. It then reversed some gains and settled at 20,145 yuan/mt. SHFE zinc prices also received some support from shrinking inventories across Shanghai, Tianjin and Guangdong and the high spot premiums. We expect the 1810 contract to try to stand firmly above 20,000 yuan/mt today with a trading range of 20,000-20,500 yuan/mt.

Nickel: As the dollar weakened, LME nickel climbed past $13,700/mt and closed at $13,615/mt on Monday. As longs added their positions, the SHFE 1811 contract hit a high of 112,830 yuan/mt before it edged down and closed at 112,180 yuan/mt overnight. Shrinking inventories and upbeat fundamentals front also buoyed nickel prices. We expect nickel prices to extend their gains today. LME nickel is likely to hover around $13,700 today with the SHFE 1811 contract trading at 112,000-113,500 yuan/mt. Spot prices are seen at 112,000-114,000 yuan/mt.

Lead: LME lead broke its rangebound trend near closing overnight and touched a low of $1,975/mt with pressure from shorts. We expect it to trade weakly today. The SHFE 1810 contract fell back to around the daily moving average with resistance from the five-day moving average. It was then dragged down by its weakened LME counterpart, to a low of 17,450 yuan/mt. Further downward room is expected in the contract in the short run.

Tin: LME tin regained some ground at the five-day moving average and closed higher at $18,790/mt on Monday. It is likely to remain strong in the short term with resistance at $19,100/mt. The SHFE 1809 contract opened higher but fell overnight, without support from its strong LME counterpart. We expect it to remain under pressure in the short run given the low season in the Chinese market and as the most traded SHFE tin contract is about to change. Support is seen at 141,000 yuan/mt.

Morning comments Copper Aluminium Zinc Lead Nickel 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.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

24 mins ago

Vicuña Awards 63.6-km Northern Corridor Contract as Josemaria-Filo Development Advances

Vicuña Corp., the 50/50 joint venture between BHP and Lundin Mining, has awarded the construction contract for Sections A1 and A2 of the Northern Corridor in Argentina, advancing enabling infrastructure for the integrated Josemaria and Filo del Sol copper-gold-silver project. The contract was awarded to a joint venture comprising Contreras, BBC (Boetto y Buttigliengo Constructora) and San Juan-based Construmin following a technical and economic evaluation process that also considered local participation. The awarded sections cover 63.6 kilometres between Angualasto and Junta La Palca, passing through Malimán, and form the first portion of the broader Northern Corridor, which is reported at approximately 220 kilometres. The route is intended to provide future access to the Vicuña project through San Juan Province and support logistics requirements associated with upcoming development stages. The scope of work includes earthworks, embankment construction, excavation and blasting, drainage systems, retaining structures, signage and other road-safety infrastructure. Vicuña is being advanced through a staged development strategy, with Josemaria expected to form the first stage of development, followed by subsequent development of Filo del Sol. BHP has indicated that a Stage 1 final investment decision could occur as early as the end of 2026. The contract award marks another tangible infrastructure milestone for Vicuña as BHP and Lundin Mining advance one of the world’s largest undeveloped copper districts. Development of reliable road access will be important for construction logistics and future operations at the remote project. While the award does not alter the current production timetable, it demonstrates continued progress on enabling infrastructure ahead of a potential Stage 1 final investment decision.

24 mins ago

25 mins ago

Algo Grande Intersects 30.23 m at 1.5% CuEq at Adelita, Including 3.55 m at 9.4% CuEq

Algo Grande Copper announced first assay results from its Phase II drilling programme at the Adelita Project in Sonora, Mexico, confirming high-grade copper-silver-gold skarn mineralisation at the Cerro Grande discovery. Hole AG-CG-PH2-002 intersected 30.23 metres grading 1.5% copper equivalent from 146.70 metres, comprising 0.83% copper, 47.3 g/t silver and 0.40 g/t gold. The interval included 3.55 metres grading 9.4% CuEq, containing 5.26% copper, 311.8 g/t silver and 2.22 g/t gold, as well as a 1.20-metre interval grading 15.8% CuEq, including 9.84% copper. The company said the mineralisation was intersected approximately 100 metres above the high-grade zone encountered during its Phase I drilling programme, indicating that the Cerro Grande system extends closer to surface than previously recognised. The hole was completed at a final depth of 661.8 metres. Assays remain pending below 179 metres, where a further 40.40 metres of visually mineralised core was logged between 179 and 301 metres. Additional Phase II holes along the Cerro Grande magnetic corridor also contain visually logged copper mineralisation, although assay results for those intervals remain outstanding. The Phase II programme is designed to expand the Cerro Grande skarn discovery along a 2.5-km magnetic corridor, with approximately 7,200 metres across 15 holes planned. The latest results extend high-grade copper-silver-gold mineralisation into a shallower part of the Cerro Grande system and provide further evidence of continuity along the skarn horizon. However, significant portions of the ongoing Phase II drilling remain supported only by visual observations, making forthcoming assays important in determining whether the mineralised footprint can be materially expanded. CuEq values are based on assumed recoveries, while true widths have not yet been established.

25 mins ago

43 mins ago

Copper Ends 10-Week Winning Streak as US Tariff Uncertainty Triggers Sharp Pullback

According to foreign media reports, copper recorded its first weekly decline since June as uncertainty over potential US tariffs on refined copper triggered a sharp reversal from record highs. Three-month copper on the London Metal Exchange traded at around US$14,238/mt on Friday, leaving prices approximately 1.2% lower for the week and ending a 10-week winning streak. Copper had reached a record US$14,875/mt before falling 3.6% on Thursday, after Reuters reported that the White House had not yet made a decision on whether to impose tariffs on refined copper imports. The pullback reflected a reduction in bullish positioning following the recent rally. However, underlying physical-market conditions remained relatively tight. Available LME copper inventories stood at 117,600 tonnes, while copper stocks monitored by the Shanghai Futures Exchange fell 13% week on week to 54,780 tonnes, their lowest level since January 2024. Near-term tightness on the LME also eased. The cash-to-three-month spread shifted into contango on Thursday, with cash copper trading at a US$4.50/mt discount to the three-month contract, indicating reduced concern over immediate metal availability. Uncertainty surrounding US trade policy remains an important driver of copper flows. Reuters reported that the White House has not yet made a decision on refined copper tariffs, as officials weigh concerns over higher manufacturing costs against the potential benefits of encouraging domestic mining. Expectations of possible tariffs had previously encouraged greater copper flows into the US, contributing to regional inventory imbalances. Copper's retreat from record highs suggests that tariff expectations had become an important component of recent bullish positioning. While uncertainty over US trade policy could continue to generate short-term volatility, falling Chinese inventories and geographically concentrated stocks indicate that underlying physical supply conditions remain relatively tight. The shift of the LME spread into contango, however, suggests that immediate availability concerns have eased compared with earlier in the rally.

43 mins ago