SHANGHAI, Sep 26 (SMM) –
Copper: LME copper recovered most of the losses that it made during the Asian trading hours and ended at $6,280.5/mt overnight. The SHFE 1811 contract rose overnight, bolstered by the gains that its LME counterpart made in Friday trading. LME copper found support at the five-day moving average and the SHFE 1810 contract opened near the 51,000 yuan/mt level. The SHFE/LME ratio remained high. We see upward room for copper prices in the short term given low inventories. Spot premiums are seen at 0-60 yuan/mt.
Aluminium: LME aluminium broke through resistance at several moving averages to a high of $2,033.5/mt before it came off from the 20-day moving average to close at the 40-day moving average. Open interest for the contract grew 317,000 lots to 672,000 lots with builds of long positions accounting for the majority. Investors flowed to LME zinc from SHFE zinc following the news that Rusal seeks to establish trading team in China. We expect LME aluminium to remain strong in the short term and trade at $2,055-2,075/mt today. With support at the five-day moving average, the SHFE 1811 contract rebounded to the daily moving average after it fell to 14,605 yuan/mt. We expect it to trade rangebound in the short term and to trade at 14,580-14,700 yuan/mt today with spot discounts at about 20 yuan/mt.
Zinc: With support at the five-day moving average, LME zinc clawed back some earlier losses during the Asian trading hours. It initially continued to climb during the European trading hours before it fell to end in negative territory. While LME zinc has stood above the 60-day moving averages, its KDJ lines converged. We expect it to test support at $2,500/mt today with a trading range of $2,480-2,530/mt. The SHFE 1811 contract initially jumped to 21,980 yuan/mt overnight before it came off to 21,530 yuan/mt as short-term shorts covered their positions. It then consolidated around 21,580 yuan/mt and ended at 21,590 yuan/mt. The contract met resistance at 22,000 yuan/mt but found support at the five-day moving average overnight. The recent short squeeze in the October contract eased on sharp position liquidation. We expect the SHFE 1811 contract to trade at 21,300-21,800 yuan/mt today.
Nickel: LME nickel surged past $13,000/mt overnight before it edged down to hover around $12,940/mt. The SHFE 1811 contract crept to a high of 106,600 yuan/mt before it reversed some gains to close at 105,560 yuan/mt. Gains in both LME and SHFE nickel prices are likely to be mild in the short term after substantial increases made on Friday. We expect LME nickel to hover around $13,000 yuan/mt today and the SHFE 1811 contract to trade at 105,000-106,500 yuan/mt. Spot prices are seen at 105,000-112,000 yuan/mt.
Lead: LME lead dropped to close at $2,010.5/mt from a high of $2,041/mt overnight. As it has fallen for two consecutive days, a downward track looms. The SHFE 1811 contract tumbled to a low of 18,090 yuan/mt before it recovered some losses to end at 18,240 yuan/mt. Open interest for the contract sharply shrank 4,514 lots to 57,376 lots as investors feared for any macroeconomic developments during the week-long National Day holiday.
Tin: LME tin traded rangebound and settled flat at $18,890/mt overnight. The SHFE 1901 contract consolidated at highs and closed at 146,430 yuan/mt. Without strong upward momentum, it may sustain its trend and received support at 145,000 yuan/mt today. Investors would take more cues from development of the macro economy.