SHANGHAI, Sep 27 (SMM) –
Copper: LME copper strongly fluctuated around $6,283/mt and closed at $6,289/mt overnight. As longs built up their positions, the SHFE 1811 contract climbed to a high of 50,490 yuan/mt before it reversed some gains to end at 50,350 yuan/mt. LME copper approaches the $6,300/mt level and scrap supply appears to grow. We expect copper prices to remain strong in the short term but their steam may weaken. Spot prices are seen at discounts of 20 yuan/mt to premiums of 30 yuan/mt.
Aluminium: LME aluminium traded rangebound and closed at $2,055/mt overnight and is expected to continue such rangebound pattern today with a trading range of $2,040-2,100/mt. The SHFE 1811 contract initially hovered around 14,550 yuan/mt within a band of 10 yuan/mt before it dropped to a low of 14,515 yuan/mt. It then hovered around 14,530 yuan/mt and ended at 14,525 yuan/mt. The contract has closed lower for three consecutive days and its weekly KDJ lines expanded downwards. We expect a weak performance for the contract today given the news that Rusal seeks to establish trading team in China and cautious sentiment among investors ahead of the week-long public holiday. The SHFE 1811 contract is likely to trade at 14,500-14,750 yuan/mt with spot prices at discounts of 40 yuan/mt to premiums of 10 yuan/mt.
Zinc: LME zinc managed to stand firmly above the 60-day moving average and closed at $2,545/mt overnight. A 5,775-mt decline in LME inventories provided some support to zinc prices. We expect LME zinc to extend its gains today with a trading range of $2,510-2,560/mt. The SHFE 1811 contract rebounded to end at 21,705 yuan/mt overnight after it fell to the 21,600 yuan/mt level as some longs covered their positions. While downstream consumers are expected to stockpile ahead of the holiday, demand across the physical market remained sluggish and premiums fell from previous highs. This may impact the futures market. We expect the SHFE 1811 contract to trade rangebound at 21,350-21,850 yuan/mt today.
Nickel: LME nickel plunged to close at $12,820/mt overnight after hovering around $13,040/mt and under the pressure at the 40-day moving average. As longs covered their positions, the SHFE 1811 contract tumbled to a low of 105,100 yuan/mt before it rebounded to the daily moving average and settled at 105,390 yuan/mt. Investors have focused their attention back to the fundamentals front after the US and China announced their latest round of tariffs on each other last week. We expect nickel prices to trade rangebound in the short term given the growth in supply and demand. LME nickel is likely to hover around $12,900/mt today; the SHFE 1811 contract is likely to trade at 105,000-106,500 yuan/mt. Spot prices are seen at 105,000-112,000 yuan/mt.
Lead: LME plummeted past $2,000/mt to a low of $1,981/mt during the European trading hours and ended at $1,995/mt. It registered a three-day losing streak and came under several moving averages. The SHFE 1811 contract hovered around the daily moving average and closed at 18,015 yuan/mt after it failed twice to climb up. Open interest for the contract shrank 1.118 lots to 54,904 lots. We expect it to test support at the 40-day moving average today and tomorrow amid thinning trading activity ahead of the week-long public holiday.
Tin: LME tin lost its earlier gains and closed at $18,840/mt overnight. We expect it to remain rangebound with resistance at $19,300/mt and support at $18,600/mt. The SHFE 1901 contract consolidated around 146,400 yuan/mt and ended at 146,420 yuan/mt overnight and is likely to continue to trade rangebound in the near term.
