SMM Morning Comments (Sep 12)

Published: Sep 12, 2018 09:56 (GMT+8)
SMM Morning Comments

SHANGHAI, Sep 12 (SMM) –

Copper: Prices of copper dipped at slower rates compared with other base metals when shorts depressed them across the board. LME copper declined some 2% to the lowest overnight, but received support at the $5,800/mt level. On the spot market, premiums are likely to rally to 10-60 yuan/mt with expectations of stronger consumption by traders.  

Aluminium: LME aluminium slumped to a low of $2,042/mt as base metals contracts fell during the European trading session. It closed at $2,050/mt. However, we retain our expectations of limited downward room as costs of raw materials are high. Its trading range is set at $2,040-2,065/mt today. The SHFE 1811 contract met resistance at the 40- and five-day moving averages, and settled at 14,620 yuan/mt. It may trade at 14,580-14,720 yuan/mt today with spot offers at a discount of 30 yuan/mt to a premium of 10 yuan/mt. 

Zinc: LME zinc fell further after a rebound, due to limited upward momentum, and settled the night 1.78% lower at $2,321/mt. As risk aversion sentiment is unlikely to ease in the short run, we expect LME zinc to trade weakly at $2,300-2,350/mt today. The SHFE 1811 contract dipped below the Bollinger lower band as shorts increased. Expectations of production resumption after environmental curbs also weighed on prices. The contract is likely to trade at 20,100-20,600 yuan/mt today. 

Nickel: As the US dollar stayed at highs and trade war concerns lingered, LME nickel declined to an eight-month low and the SHFE 1811 fell to the lowest in five months overnight. We expect LME nickel to consolidate around $12,300/mt with the contract trading at 100,000-102,000 yuan/mt today. Spot prices are set at 100,500-107,000 yuan/mt. 

Lead: The threat of a trade war depressed LME lead to the lowest in nearly a month at $1,957.5/mt. It is likely to test psychological support at the $1,917.5/mt level in the short run. The SHFE 1810 contract slumped below the five- and 10-day moving averages, and settled at 18,595 yuan/mt. Strong resistance is seen above in the short run if the contract attempts to rebound.

Tin: LME tin failed to extend its upward trend as it traded rangebound and closed at $19,040/mt. Resistance above is set at $19,300/mt, with support at $18,600/mt. The SHFE 1901 contract mostly hovered around the five- and 20-day moving averages. With downbeat macroeconomic sentiment, it may trade weakly around 145,000 yuan/mt today. 

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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