SMM Morning Comments (Nov 1)

SHANGHAI, Nov 1 (SMM) –

Copper: As shorts added their positions after the dollar refreshed its 16-month high, LME copper fell off its daily moving average to a low of $5,984/mt and ended at $5,999.5/mt overnight. The SHFE 1812 contract dropped to session-lows of 48,710 yuan/mt after climbing to a high of 49,290 yuan/mt. It regained some losses by the closing bell overnight. Both LME and SHFE copper now stand below their 60-day moving averages. In the domestic physical market, trades were thin in the last trading day of October. LME copper is expected to trade at $5,990-6,040/mt today with the SHFE 1812 contract at 48,900-49,400 yuan/mt. Spot discounts are seen at 50-20 yuan/mt.

Aluminium: With pressure at the 14,000 yuan/mt level, the SHFE 1812 contract reversed its direction and fell to close near its session-lows of 13,940 yuan/mt overnight after it climbed to a high of 14,020 yuan/mt. The 1901 contract turned to be the most traded SHFE aluminium contract overnight. SHFE aluminium is expected to trade at 13,900-14,050 yuan/mt today with spot discounts at 70-30 yuan/mt. As the US dollar extended its gains, LME aluminium reversed its earlier gains to a fresh low of $1,953.5/mt, the lowest since August 2017, and closed at $1,955.5/mt overnight. It is expected to trade at $1,940-1,980/mt today with a strong US dollar.

Zinc: With a firm US dollar, LME zinc fell past the 40-, 60-day moving averages and the $2,500/mt level in a row and posted a three-day losing streak overnight. It is likely to continue its weak performance today with a trading range of $2,450-2,500/mt. As shorts added their positions, the SHFE 1812 contract plummeted to a low of 21,380 yuan/mt after a relatively steady start overnight. Its Bollinger bands converged, suggesting lingering pressure in the near term. The SHFE 1812 contract is expected to extend its decline to test support at the 40-day moving average today. The SHFE/LME ratio rebounded as SHFE zinc outperformed its LME counterpart of late.

Nickel: LME nickel plunged to a low of $11,500/mt in the late trading on Wednesday before it rebounded to end at $11,540/mt. Following a lower open, the SHFE 1901 contract traded rangebound before it fell to a low of 96,610 yuan/mt as shorts added their positions. The contract closed at 96,710 yuan/mt overnight. In the domestic physical market, stainless steel mills held back from purchases given the recent declines in nickel prices. LME nickel is likely to hover around $11,600/mt today with the SHFE 1901 contract at 96,500-98,000 yuan/mt. Spot prices are seen at 98,000-106,500 yuan/mt.

Lead: LME lead recovered some losses to close at $1,915/mt overnight after tumbling to a low of $1,891/mt as shorts built their positions. It closed lower for three consecutive days after falling past $2,000/mt. With limited support at $1,900/mt, the contract approached a previous low of $1,876/mt and grew bearish sentiment across the market. The SHFE 1812 contract opened deep in the red overnight, but purchases by bargain seekers bolstered the contract to a high of 18,410 yuan/mt before it reversed some of those gains to end at 18,360 yuan/mt as some longs took profits. Market participants should monitor support at the 40-day moving average.

Tin: LME tin traded rangebound to finish the trading day higher at $19,130/mt. Given the dollar’s strength, LME tin is expected to remain rangebound in the short term with support at $19,000/mt and resistance at $19,400/mt. The SHFE 1901 contract consolidated around 145,700 yuan/mt overnight with tight supplies of ore materials and weak consumption. It is expected to continue its rangebound pattern in the short term.