SMM Morning Comments (Nov 12)

Published: Nov 12, 2018 10:03

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SMM Morning Comments

SHANGHAI, Nov 12 (SMM) –

Copper: LME copper fell below the 60-day moving average with its MACD green line lengthening, as the US dollar gained after the midterm election. The SHFE 1901 contract registered the sixth consecutive trading day of decline as it dipped below the 60-day moving average and the Bollinger lower band. Copper prices are likely to see limited upward room in the short run. We expect the contract to trade at 48,800-49,200 yuan/mt with its LME counterpart trading at $6,020-6,080/mt today. Spot offers may receive some support as the prices of futures dipped and the delivery day approached. Spot premiums are seen at 10-50 yuan/mt today.

Aluminium: As the US postponed the deadline for sanctions on Russian aluminium producer Rusal, LME aluminium fell to the lowest of last Friday night at $1,954/mt. The SHFE 1901 contract also traded weakly below the five- and 10-day moving averages as the US dollar strengthened. It closed at 13,865 yuan/mt after it fell to a low of 13,845 yuan/mt. The contract will trade at 13,800-13,900 yuan/mt today with its LME counterpart at $1,950-1,990/mt. Spot discounts are seen at 60-20 yuan/mt.

Zinc: Short-term supply tightness buoyed the SHFE 1901 contract after it dipped to a low of 20,715 yuan/mt. As investors added their longs, it rebounded to a high of 21,180 yuan/mt, with resistance at the 10- and 40-day moving averages. It settled at 21,080 yuan/mt and may trade at 20,850-21,300 yuan/mt today. LME zinc also received support from longs and rose to a high of $2,535.5/mt. A higher US dollar, however, saw it close at $2,500/mt. It is likely to consolidate at $2,480-2,530/mt today.

Nickel: Rising shorts dragged the SHFE 1901 contract below the 95,000 yuan/mt level, to a low of 94,420 yuan/mt. This came after the contract diverged gradually from the daily moving average after opening, pressured by a stronger US dollar. LME nickel also weakened with resistance from the daily moving average. It closed at $11,415/mt with open interests up 2,558 lots to 229,000 lots. We expect it to trade around $11,500/mt with the SHFE 1901 contract trading at 94,500-96,000 yuan/mt today. Spot prices are set at 95,000-105,000 yuan/mt.

Lead: A strengthening US dollar dragged LME lead off its earlier highs to a low of $1,958.5/mt on Friday before the contract rebounded to the daily moving average to close at $1,967/mt. LME lead is expected to weaken, faced with a robust US dollar. In response to the losses in its LME counterpart, the SHFE 1812 contract saw a negative start on Friday night. After it fell to a low of 18,385 yuan/mt, the contract rebounded to the daily moving average at 18,450 yuan/mt and ended at 18,455 yuan/mt. The contract traded rangebound at high levels on Friday night, suggesting the divergence between shorts and longs, while technical indicators remained on an upward track with support at the 20-day moving average.

Tin: LME tin failed to extend its increase last Friday night as the US dollar rebounded. It lost $180/mt to settle at $19,110/mt with LME tin inventories dipping 150 mt to 2,920 mt. The SHFE 1901 contract also traded rangebound between 148,660 yuan/mt and 149,600 yuan/mt last Friday night. Potential tighter supplies in domestic market will support the contract in the short run. It is expected trade with support at 148,000 yuan/mt and resistance at 150,000 yuan/mt today.

Morning comments Futures movement

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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