SHANGHAI, Oct 23 (SMM) –
Copper: As the US dollar index rebounded past 96, LME copper dropped to a low of $6,221.5/mt on Monday after it rose to a high of $6,331.5/mt. Despite a higher open, the SHFE 1812 contract fell overnight as shorts were keen to build their positions. China's central bank said on Monday that it will boost relending and rediscount quotas by 150 billion yuan to aid financing needs of small enterprises, as part of the government's measures to strengthen private sector support. This is set to support the market into the longer term. In the physical market, sellers are keen to hold their offers firm as traders need to fulfill long-term contracts this week. Consumption of copper cathode weakened as wider price spreads between copper cathode and scrap deplete demand for refined materials. LME copper is likely to trade at $6,170-6,240/mt today with the SHFE 1812 contract at 50,100-50,800 yuan/mt. Spot prices are seen between discounts of 20 yuan/mt to premiums of 50 yuan/mt.
Aluminium: The SHFE 1812 contract overnight fell past the daily moving average to a low of 14,130 yuan/mt due to declines in its LME counterpart. This forced the SHFE contract to lose most of its earlier gains. The contract is expected to trade at 14,100-14,250 yuan/mt today with spot discounts at 70-30 yuan/mt. With a strong dollar and a lack of upward momentum, LME aluminium fell to an intraday low of $2,002/mt from a high of $2,032/mt on Monday. While it recovered some losses by closing, it still posted a four-day losing streak. As the dollar continues its strong performance, LME aluminium is likely to continue its weak performance today with a trading range of $1,990-2,030/mt.
Zinc: As the dollar strengthened, LME zinc edged down and hovered around the daily moving average after it reached a high of $2,673/mt on Monday. Its short-term moving averages adhered to each other while shorts and longs struggled. We expect LME zinc to trade at $2,630-2,680/mt today. The SHFE 1812 contract consolidated around the 22,000 yuan/mt level within a 30 yuan/mt range to end the overnight trading hours after it fluctuated around the 22,030 yuan/mt level. We expect the SHFE 1812 contract to trade at 21,800-22,250 yuan/mt today as investors remain cautious.
Nickel: As the dollar rose, LME nickel reversed early-session gains and ended the trading day in negative territory. With limited steam, the SHFE 1901 contract failed to hit the 105,000 yuan/mt level and weakened in late trading overnight. LME nickel is likely to hover around $12,500/mt today with the SHFE 1901 contract at 103,000-104,500 yuan/mt. Spot prices are seen at 103,500-110,000 yuan/mt.
Lead: SHFE lead's solid performance boosted its LME counterpart to a high of $2,019/mt during Asian trading hours. After European trading sessions began, LME lead extended its gains before a robust dollar eroded all its early-session gains. It regained some losses by closing and is expected to consolidate around $2,000/mt in the short term. The SHFE 1812 contract stemmed its decline and traded around the daily moving average overnight after the drop in its LME counterpart dragged the SHFE contract to a low of 18,095 yuan/mt. Market participants should monitor support at the 18,000 yuan/mt level in the short term.
Tin: LME tin came off from a high of $19,300/mt and settled at $19,200/mt, up $65/mt from last Friday night. The SHFE 1901 contract mostly hovered between the five- and 10-day moving averages overnight, and also closed higher at 147,630 yuan/mt. Some 1,000 mt monthly production of tin concentrate is likely to be affected as Gejiu of Yunnan province will shut down unqualified mills before October 31. This is expected to buoy prices of tin. Pressure for the 1901 contract is seen at 149,000 yuan/mt in the short run.