SMM Morning Comments (Nov 13)

SHANGHAI, Nov 13 (SMM) – 

Copper: A higher US dollar above 97.5 dragged LME copper below the daily moving average overnight. It closed at $6,042/mt after it fell to a low of $6,038/mt, with open interests up 3,673 lots to 312,000 lots. The SHFE 1901 contract registered the seventh consecutive trading day of decline as shorts depressed it from a high of 49,090 yuan/mt and settled it at 48,900 yuan/mt. We expect it to trade at 48,650-49,050 yuan/mt today with its LME counterpart trading at $6,020-6,080/mt. Thin trades are likely to lower spot premiums to 30-90 yuan/mt. 

Aluminium: A surge of some 7,000 lots of short positions weighed the SHFE 1901 contract to a low of 13,735 yuan/mt right after opening. Limited upward momentum kept the contract around 13,770 yuan/mt and closed at 13,765 yuan/mt. It i sunlikely to rebound significantly today and will trade at 13,700-13,840 yuan/mt, with spot discounts down to 40 yuan/mt. LME aluminium dipped to the Bollinger lower band and a low of $1,937/mt after it failed to test resistance above twice overnight. Pressured by a stronger US dollar, it is expected to trade at $1,920-1,950/mt today. 

Zinc: LME zinc failed to test pressure above at the 10-day moving average as the US dollar strengthened. It closed at $2,492/mt and may continue trading rangebound today at $2,475-2,525/mt. The SHFE 1901 contract also faced resistance at the 10-day moving average after it rose to a high overnight of 21,110 yuan/mt as investors covered their shorts. It is likely to trade at 20,850-21,300 yuan/mt today as pressure from several moving averages above persists. 

Nickel: Macroeconomy pessimism and weak fundamentals lowered LME nickel by 0.61% and weighed the SHFE 1901 contract by 0.04% below the 95,000 yuan/mt level. We expect LME nickel to trade around $11,350/mt with the SHFE 1901 contract at 94,000-95,500 yuan/mt today. Spot prices are set at 95,000-106,000 yuan/mt.

Lead: LME lead led the losses among base metals as the US dollar increased. It broke support of all moving averages and tumbled to a low of $1,920.5/mt, closing 2.36% lower on the day at that level. With a lower LME lead, the SHFE 1812 contract traded weakly around the daily moving average with the lowest overnight at 18,470 yuan/mt. Its rangebound trend is likely to extend today.

Tin: A stronger SHFE tin pulled up its LME counterpart during the Asian trading session, to a high of $19,360/mt. However, a rising US dollar in the European trading session eroded part of its increase, and saw it close at $19,230/mt, up $120/mt on the day. Pressure above is set at $19,400/mt in the short run. The SHFE 1901 contract consolidated at highs overnight, supported by supply tightness in the domestic market. It settled at 151,780 yuan/mt and will face pressure at 152,000 yuan/mt today.