SMM Morning Comments (Oct 30)

SHANGHAI, Oct 30 (SMM) –

Copper: As the US dollar rebounded, LME copper came off from day-highs of $6,240/mt on Monday. As longs covered their positions, LME copper extended its decline and lost all earlier losses by closing. The SHFE 1812 contract opened higher and rose to a high of 50,170/mt overnight as longs added their positions. The contract then turned around, tracking losses in its LME counterpart and dropping to a low of 49,830 yuan/mt. The US dollar remained strong against the euro due to political uncertainty in Europe. Market participants should monitor China’s efforts to boost domestic demand. Copper prices are likely to trade rangebound around $6,200/mt in the short term. LME copper is expected to trade at $6,120-6,200/mt today with the SHFE 1812 contract at 49,800-50,300 yuan/mt. Spot discounts are seen at 100-80 yuan/mt.

Aluminium: The SHFE 1812 contract reversed its direction after hitting a high of 14,200 yuan/mt overnight. It then slid to close near its session-lows at 14,125 yuan/mt. Declines in Chinese shares hampered sentiment across the futures markets. The contract is likely to trade at 14,050-14,200 yuan/mt today with spot discounts at 70-30 yuan/mt. LME aluminium ended near its day-lows of $1,978/mt overnight. It is likely to remain weak today with a trading range of $1,980-2,010/mt.

Zinc: As shorts added their positions, LME zinc extended earlier losses to week-lows of $2,605/mt by closing on Monday. As shorts and longs struggled, it traded rangebound around $2,645/mt for close to one month. It is expected to trade at $2,585-2,635/mt today. The SHFE 1812 contract fell past 22,000 yuan/mt and closed at 22,020 yuan/mt overnight as some longs booked profits after the contract climbed to 22,255 yuan/mt. SMM data showed that social inventories across Shanghai, Guangdong and Tianjin increased over the weekend. The SHFE 1812 contract is expected to trade at 21,850-22,300 yuan/mt today.

Nickel: LME nickel fell and closed at $11,740/mt on Monday. As shorts added their positions, the SHFE 1901 contract reversed its earlier gains that it made on short-covering and ended at 98,330 yuan/mt overnight. LME nickel is likely to hover around $11,800/mt today with the SHFE 1901 contract at 97,500-99,000 yuan/mt. Spot prices are seen at 99,000-107,500 yuan/mt.  

Lead: A stronger US dollar depressed LME lead to a low of $1,957.5/mt, which mostly hovered around the daily moving average during the Asian trading session. It settled at $1,960/mt with further downward room expected in the short run. The SHFE 1812 contract failed to extend its increase on Monday as it did not rebound much after it fell to a low of 18,445 yuan/mt. It closed at 18,485 yuan/mt and will test support at the five- and 10-day moving averages today.

Tin: LME tin opened lower and fell on Monday. It closed at $19,105/mt with day-lows near the 20-day moving average. LME tin is expected to continue to trade rangebound in the short term under the pressure from a strong US dollar and with support at $19,000/mt. The SHFE 1901 contract pared earlier gains to end lower than the previous night. It is likely to weaken today with support at 146,000 yuan/mt.