SMM Morning Comments (Sep 13)

Published: Sep 13, 2018 09:50 (GMT+8)
SMM Morning Comments

SHANGHAI, Sep 13 (SMM) –

Copper: Prices of copper received support from news that senior US officials were seeking to jumpstart trade talks with China Wednesday. The SHFE 1811 contract rallied to above the 20-day moving average as longs increased when market sentiment improved. It will test support at that level today. Spot premiums are likely to remain at 10-50 yuan/mt. Premiums may rise after the delivery date for the SHFE September contract. 

Aluminium: As market fretted over the US relaxing sanctions on Rusal, LME aluminium slumped to a low of $2,010/mt. Prospects on potential China-US trade talks then buoyed it to rebound, but heavy pressure was seen from several moving averages above. It closed at $2,057.5/mt and may trade at $2,040-2,070/mt today. Prices of the SHFE 1811 contract followed a similar movement overnight and settled at 14,575 yuan/mt. Strong support was seen at the 14,500 yuan/mt level. The contract is expected to trade at 14,500-14,650 yuan/mt today with spot offers at a discount of 10 yuan/mt to a premium of 30 yuan/mt. 

Zinc: LME zinc rebounded close to the $2,400/mt level as the US dollar dipped and LME zinc inventory extended its decline. However, limited upward room is expected given heavy pressure above at the 10- and 20-day moving averages. It is likely to test resistance above at $2,400/mt today and to trade at $2,365-2,415/mt. The SHFE 1811 contract also climbed above the Bollinger middle band as pessimism in the market eased. It may consolidate at 20,550-21,000 yuan/mt today. 

Nickel: As a weaker US dollar and allayed macroeconomic concerns, base metals received a boost, LME nickel broke pressure at the 10-day moving average and rose to a high of $12,655/mt. The SHFE 1811 contract also strengthened to the highest overnight at 103,610 yuan/mt. Purchasing enthusiasm downstream improved, with smaller domestic and overseas supplies. This is also set to support nickel prices. We expect LME nickel to hover around $12,500/mt with the contract trading at 102,500-104,500 yuan/mt today. Spot prices are set at 101,500-108,500 yuan/mt.

Lead: LME lead soared to close at $2,036/mt on Wednesday as market sentiment improved on news that Washington was keen to resume trade talks with Beijing. It is likely to test pressure at $2,050/mt today. LME lead overnight bolstered its SHFE counterpart to recover early losses to end at 18,945 yuan/mt. If the SHFE 1810 contract regains losses made on Tuesday September 11, in the short term, it is likely to return to an upward track.

Tin: LME tin rebounded from a low of $18,770/mt as the US dollar slid and trade war concerns abated. It closed at $19,050/mt and will face pressure above at $19,300/mt. The SHFE 1901 contract also grew, but failed to break resistance at several moving averages above. Investors would take guidance from the development of trade talks between China and the US. 

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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