SHANGHAI, Oct 9 (SMM) –
Copper: LME copper rebounded to a high of $6,224.5/mt from a low of $6,126/mt on Monday. This helped it stand firmly above the 20-day moving average. The SHFE 1811 contract reversed some gains overnight after hitting a high of 50,320 yuan/mt, which was near the five-day moving average. China’s actions, including a steep cut in the amount of cash that banks must hold as reserves, quickening special bond issuance for shanty-town redevelopment, an increase in export tax rebates from November 1, supported copper prices in the domestic market. Stocks at home and abroad continued their declines. We expect LME copper to trade at $6,170-6,230/mt with the SHFE 1811 contract at 50,000-50,500 yuan/mt. Spot premiums are seen at 40-80 yuan/mt.
Aluminium: LME aluminium traded under pressure on Monday on news that Norsk Hydro obtained a key permit to restart its Alunorte refinery at half of its capacity. A firm US dollar also kept LME aluminium from climbing, on its strong SHFE counterpart. We expect it to trade at $2,050-2,090/mt today. The SHFE 1811 contract extended its daytime gains overnight and tested the 60-day moving average as China decided to raise export tax rebates from November 1. We expect it to trade at 14,500-14,650 yuan/mt today with spot discounts at 50-20 yuan/mt.
Zinc: LME zinc traded rangebound on Monday, settling 0.1% higher at $2,623.5/mt but its intraday low stood below the 10-day moving average. With limited upward momentum, according to technical indicators, it is expected to hover at $2,590-2,640/mt today. The SHFE 1811 contract performed strongly overnight and overcame resistance at the middle Bollinger band with massive buying by longs. We expect it to continue its strong performance today with a trading range of 22,300-22,800 yuan/mt.
Nickel: LME nickel received support after falling to a low of $12,400/mt when the US dollar inched down. Inventories across LME warehouses declined 1,326 mt to 226,476 mt. The SHFE 1811 contract broke resistance at the 105,000 yuan/mt level but limited upward momentum is seen as both supply and demand grow domestically. We forecast LME nickel to hover around $12,600/mt today, with the SHFE 1811 contract trading at 103,000-105,000 yuan/mt. Spot prices are set at 103,500-110,000 yuan/mt today.
Lead: LME lead registered a four-day losing streak on Monday. Given strong pressure at moving averages and a strong US dollar, we expect it to trade at $1,950-1,990/mt today. A weak LME lead also dragged its SHFE counterpart overnight before institutional investors pushed up the SHFE 1811 contract to end in the black. Investors were keen to book profits at the 10-day moving average after SHFE lead rose for two consecutive days. We expect the contract to trade at 18,050-18,250 yuan/mt today with spot prices at 18,250-18,450 yuan/mt in Shanghai.
Tin: LME tin continued its rangebound pattern on Monday and is likely to remain under pressure. The SHFE 1901 contract consolidated around 147,300 yuan/mt overnight. Given it weak LME counterpart, the SHFE 1901 contract is likely to remain rangebound today with support at 146,500 yuan/mt.
