SMM Morning Comments (Aug 31)

SHANGHAI, Aug 31 (SMM) – 

Copper: Investor risk aversion intensifies as US President Donald Trump plans to move forward with tariffs on another $200 billion worth of Chinese imports, according to a new report. This is set to weigh on copper prices in the short run. We expect LME copper to test support at the 10-day moving average, with the SHFE 1810 contract hovering around 48,500 yuan/mt today. Spot premiums are seen at 60-120 yuan/mt. 

Aluminium: LME aluminium and SHFE contracts registered smaller drops compared with other base metals when the US dollar rebounded overnight. Prices received support from higher costs of raw materials. As of August 31, SMM assessed the spot alumina price at 3,288 yuan/mt, up 17% from a year ago, and the price of imported materials at $610/mt, up 88.27% from last year. 

Zinc: As the US dollar rebounded on its robust personal consumption expenditures (PCE) price index for July, LME zinc slumped below the $2,500/mt level to an intraday low of $2,434/mt. Shrinking LME zinc inventories provided limited support. The SHFE 1810 contract was dragged down by its weakened LME counterpart and closed 185 yuan/mt lower from Wednesday at 21,125 yuan/mt. It tested support at the 10-day moving average overnight. Today, the contract is likely to trade at 21,000-21,500 yuan/mt with support at the 40-day moving average, with LME zinc trading at $2,450-2,500/mt. 

Nickel: LME nickel tumbled to the $13,200/mt level before it pared some losses and closed at $13,310/mt on Thursday. The SHFE 1811 contract plummeted to a low of 108,180 yuan/mt before it regained some losses and closed overnight at 108,620 yuan/mt. Growing inventories in China eroded upward momentum in SHFE nickel prices and fuelled bearish market sentiment. We expect LME nickel to hover around $13,300/mt today and the SHFE 1811 contract to trade at 108,500-110,000 yuan/mt. Spot prices are seen at 108,000-112,000 yuan/mt.

Lead: LME lead rebounded from a low of $2,051.5/mt to settle Thursday down 0.46% at $2,074/mt. The metal has consolidated around its five-day moving average for four consecutive trading days, reflecting a continued open upward path but at a slower pace. This diverges from its SHFE counterpart. Concerns about US threats to impose additional tariffs on Chinese imports next month also clouded the outlook on LME lead prices. With its weak LME counterpart, the SHFE 1810 contract overnight failed to continue its daytime strong performance and initially tumbled to a low of 18,460 yuan/mt before it recovered some losses and ended 0.38% higher at 18,570 yuan/mt. Purchasing enthusiasm across investors was fuelled by robust performance on Thursday.

Tin: LME tin hovered between the 10- and 20-day moving averages, and gained $150/mt from August 29 to close at $19,070/mt overnight. Macroeconomic concerns may keep LME tin rangebound trend in the short run with resistance at $19,400/mt. The SHFE 1901 contract consolidated between the five- and 10-day moving averages, with limited upward momentum. It is likely to trade rangebound today.