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SMM Morning Comments (Nov 8)
Nov 8,2018 09:52CST
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SMM Morning Comments

SHANGHAI, Nov 8 (SMM) – 

Copper: After the US midterm elections, LME copper came off from a high of $6,219.5/mt, and fell below the daily moving average to settle at $6,155/mt. This approached the lower Bollinger band. The SHFE 1901 contract also slid from highs overnight, as pressure from shorts prevented it from standing above the daily moving average. It dipped under the 40-day moving average at one point. We expect copper prices to remain weak today, with the SHFE 1901 contract trading at 48,100-49,600 yuan/mt and LME copper at $6,120-6,170/mt. Spot sellers are likely to firm up premiums at 40-80 yuan/mt. 

Aluminium: Falling base metals little affected the SHFE 1901 contract overnight as it hovered above the Bollinger upper band. It closed at 13,950 yuan/mt after it rose to a high of 13,965 yuan/mt, with its KDJ indicators expanding upwards andthe MACD green line shortening. We expect it to trade at 13,850-14,000 yuan/mt today with spot discounts at 70-30 yuan/mt. LME aluminium also strengthened as macro sentiment improved after the midterm election. It surged to a high of $1,993.5/mt near closing and settled at $1,985.5/mt. However, given pressure above at the 20-day moving average, LME aluminium is likely to trade at $1,960-1,990/mt today. 

Zinc: LME zinc fell to close at $2,465/mt overnight and kept some distance with several moving averages. While visible inventories stayed at lows, expectations that a well-supplied concentrate market is set to boost output of refined materials continue to frustrate investors. LME zinc is likely to remain weak today with most transactions at $2,440-2,490/mt. The SHFE 1901 contract weakened within a tight range and closed at 20,680 yuan/mt overnight. Investors expect limited upside room in domestic zinc output in the fourth quarter of 2018 while the longer-term anticipation of ample global concentrate supplies encourages short bets. This is likely to bring some volatility to the zinc market. The SHFE 1901 contract is expected to trade at 20,400-20,850 yuan/mt today.

Nickel: LME nickel rebounded after it dipped to a low of $11,625/mt, while pressure above settled it at 11,770 yuan/mt overnight. Domestic nickel supplies grew as the import arbitrage window opened, and this weighed on the upward momentum of the SHFE 1901 contract, which led losses among base metals and closed 0.81% lower at 96,970 yuan/mt. The contract is expected to trade at 96,500-98,000 yuan/mt today with its LME counterpart hovering around $11,750/mt. Spot prices are seen at 98,000-107,000 yuan/mt. 

Lead: Despite pressure above at all moving averages, eased market concerns stopped the declines in LME lead, which gained $19.5/mt from Tuesday to settle at $1,933.5/mt overnight. The SHFE 1812 contract met support at 18,320 yuan/mt and increased near closing to settle at 18,355 yuan/mt amid rising longs. It is likely to test pressure above at the 20-day moving average in the short run. 

Tin: As the US dollar index fluctuated from midterm election results, LME tin traded rangebound and closed slightly lower on the night of Wednesday. Its lowest level registered $19,145/mt, and support below will be at $19,000/mt today. The SHFE 1901 contract received support from supply tightness in the domestic spot market, and grew 200 yuan/mt from Tuesday to close at 146,690 yuan/mt. Further upward room is expected today, with pressure at the 147,000 yuan/mt level. 

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