SMM Morning Comments (Nov 5)

SHANGHAI, Nov 5 (SMM) –

Copper: Amid eased sentiment over China-US trade war, LME copper extended its increase last Friday night and jumped further near closing to a high of $6,315/mt as the US dollar softened. It broke pressure at the 40-day moving average and the Bollinger middle band, settling at $6,305/mt with its MACD green line shortened significantly. The SHFE 1901 contract also traded robustly as it surged above the 20-day moving average with support from longs. The contract is expected to trade at 49,900-50,500 yuan/mt with its LME counterpart trading at $6,200-6,350/mt today. Thin transactions may sustain in the spot market today as traders firm offers at flat to a premium of 20 yuan/mt. 

Aluminium: The SHFE 1901 contract received support and rose to a high above the five-day moving average at one point last Friday night, as base metals increased for the most part on a lower US dollar. It settled at 13,960 yuan/mt and will trade at 13,900-14,000 yuan/mt today. Spot discounts are set at 70-30 yuan/mt. LME aluminium surged twice and touched a high of $2,005.5/mt last Friday night. Limited support brought it to settle at $1,987/mt. It is expected to trade at $1,960-2,010/mt today. 

Zinc: While the US dollar softened, LME zinc failed to stand firm at a high of $2,609/mt last Friday night as some longs took profits and left. It closed Friday slightly higher at $2,549/mt, and will likely trade at $2,525-2,575/mt today. The SHFE 1901 contract also came off from highs and settled at 21,255 yuan/mt. With pressure from the Bollinger middle band and limited upward momentum, the contract is expected to trade at 21,100-21,600 yuan/mt today. US sanctions against Iran will be one of the key developments to monitor today. 

Nickel: While a weaker US dollar and eased trade war tension pulled up the SHFE 1901 contract, pressure above at 100,000 yuan/mt remained and this kept the contract hovering around 98,820 yuan/mt last Friday night. It is likely to continue its rangebound trend today and trade at 98,000-99,500 yuan/mt, with its LME counterpart hovering around $11,900/mt. Spot prices are seen at 98,500-107,500 yuan/mt. 

Lead: On Friday, LME lead surged for a second straight day and rebounded past $2,000/mt. This helped it recover previous losses and eased cautious sentiment among investors. While the SHFE 1812 contract fell on Friday night, a higher open, boosted by its strong LME counterpart, helped SHFE lead to end in the black. This grows the likelihood of a correction in the short term with downward pressure. Market participants should monitor support at the five-day moving average.

Tin: LME tin traded within a narrow range and closed higher at $19,130/mt. It will face support at $19,000/mt and resistance at $19,400/mt today. Buoyed by potential tighter ore supplies from Burma, the SHFE 1901 contract rose to a high of 146,700 yuan/mt and closed at 146,430 yuan/mt. However, longs remained cautious and this will see the contract testing pressure at 147,000 yuan/mt today.