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SMM Morning Comments (Nov 2)
Nov 2,2018 10:00CST
price review forecast
SMM Morning Comments


Copper: LME copper closed near day-highs of $6,143/mt overnight as the US dollar index came off from multi-month highs on weak-than-expected economic data and a rebound in the pound. SHFE copper also closed near session-highs overnight, which returned it to the 60-day moving average. In the physical market, cash flow issues prompted sellers to offload cargoes while spot premiums rose from previous declines in prices of futures. Trades improved as traders purchased on demand. LME copper is likely to trade at $6,040-6,130/mt with SHFE copper at 49,880-49,400 yuan/mt. Spot premiums are seen up to 50 yuan/mt.

Aluminium: The SHFE 1901 contract fluctuated to end overnight trading down 0.1%. Among SHFE base metals, aluminium was the only one that closed in negative territory overnight after a "very good" phone call between US President Donald Trump and Chinese President Xi Jinping. The contract is expected to trade at 13,850-14,000 yuan/mt today with spot discounts at 70-30 yuan/mt. While LME aluminium reversed some gains it made on dips in the dollar, it stemmed its three-day losing streak and ended in the black overnight with its KDJ lines expanding upwards. Positive momentum from the US-China talk and gains in US stocks might grow risk sentiment among investors. LME aluminium is likely to trade at $1,960-2,000/mt today.

Zinc: Expectations of eased US-China trade tension buoyed LME zinc to a high of $2,566/mt last night. It regained most of its losses on Thursday and settled at $2,544.5/mt. The SHFE 1901 contract also rallied after an initial drop and closed at 21,155 yuan/mt, up 60 yuan/mt from Wednesday night. It will continue to test pressure above and trade at 20,900-21,350 yuan/mt today, with its LME counterpart trading at $2,525-2,575/mt.

Nickel: Nickel was the best performer among LME and SHFE base metals overnight. LME nickel is likely to hover around $11,700/mt today with the SHFE 1901 contract at 96,500-98,500 yuan/mt. Spot prices are seen at 97,500-106,000 yuan/mt.

Lead: A weakened dollar drove LME lead up to end near its day-highs of $1,962.5/mt overnight. We, however, expect limited upside room for the contract given strong pressure at the five-day moving average. While the SHFE 1812 contract opened higher overnight, it initially fell as longs took profits. As the sell-off eased, the contract then halted the decline and traded rangebound to finish overnight trading hours at 18,705 yuan/mt. Its moving averages still pointed towards bullish signals even though it pared some gains made in the previous day.

Tin: LME tin hovered between the 10- and 40-day moving averages on Thursday and is expected to remain rangebound into near term with support at $19,000/mt and resistance at $19,400/mt. Last night, the SHFE 1901 contract inched up from the previous day but remained under pressure from several moving averages. Anticipation of tighter supply of imported ore materials is likely to shore up the contract today with resistance at 147,000 yuan/mt.

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