SMM Morning Comments (Oct 24)

SHANGHAI, Oct 24 (SMM) –

Copper: LME copper recovered some earlier losses and closed at $6,183/mt overnight as the US dollar index dipped. The SHFE 1812 contract opened lower overnight and dropped to the lowest so far this week at 49,820 yuan/mt. It then rose to 50,240 yuan/mt. As some longs booked profits, the contract edged down by closing but still stood above 50,000 yuan/mt. Copper prices may struggle to find much upside as China’s recent fiscal stimulus have yet to boost downstream demand and Q4 infrastructure. LME copper is likely to trade at $6,150-6,210/mt today with the SHFE 1812 contract at 49,800-50,400 yuan/mt. Spot prices are seen between discounts of 30 yuan/mt to premiums of 20 yuan/mt.

Aluminium: The SHFE 1812 contract climbed to a high of 14,260 yuan/mt from a low of 14,150 yuan/mt during overnight trading. While the contract posted a four-day winning streak, it has yet to regain all the losses from last week. The recent maintenance at some large primary aluminium producers and the looming winter production curbs might improve morale among investors. The contract is likely to test the five-day moving average today with a trading range of 14,140-14,300 yuan/mt, with spot discounts at 70-30 yuan/mt. LME aluminium fluctuated and posted a five-day losing streak on Tuesday with pressure at the five-day moving average. It is expected to trade at $2,000-2,030/mt today.

Zinc: LME fluctuated to end the trading day higher and managed to stand firmly above several moving averages with its short-term moving averages steadying. Investors were cautious and appeared to be little shaken by decreasing LME inventory and high spot premiums. LME lead is likely to continue its rangebound pattern today with a trading range of $2,635-2,680/mt. The SHFE 1812 contract tried to move beyond its rangebound pattern overnight, and short-covering helped it to extend its earlier gains to a new high this week at 22,260 yuan/mt. Its short-term moving averages point towards bullish signals, suggesting lingering upward momentum. The SHFE 1812 contract is expected to trade at 21,900-22,350 yuan/mt today.

Nickel: With pressure at $12,500/mt, LME nickel weakened to the $12,400/mt level again and closed the trading day at $12,395/mt after recovering some earlier losses. The SHFE 1901 contract fell to the 102,800 yuan/mt level and ended at 102,930 yuan/mt overnight after rising past the 10-day moving average. Shandong Xinhai, a large nickel pig iron (NPI) producer in east China plans to commission new capacity at the end of this month, earlier than the previously scheduled end of December. LME nickel is likely to hover around $12,400/mt today with the SHFE 1901 contract at 102,000-103,500 yuan/mt. Spot prices are seen at 103,000-110,000 yuan/mt.

Lead: LME lead fell to the $1,996/mt level as longs booked profits after it climbed to a high of $2,016.5/mt. It then rebounded to the daily moving average and ended the trading day at $2,003.5/mt. LME lead traded rangebound around $2,000/mt level for three consecutive trading days and is likely to fall if the dollar strengthens. Despite a lower open, the SHFE 1812 contract crept to 18,225 yuan/mt before it hovered around 18,180 yuan/mt within a narrow range. The contract steadied and investors were keen to purchase at the 18,000 yuan/mt level. Market sentiment today might be impacted by the drop in US stocks overnight.

Tin: LME came off from earlier highs on Tuesday and is likely to remain rangebound in the short term with resistance at $19,300/mt. Despite a higher open, the SHFE 1901 contract slid overnight but continued to trade rangebound. It is expected to consolidate toady with resistance at 149,000 yuan/mt and support at 146,000 yuan/mt.