SMM Morning Comments (Nov 15)

SHANGHAI, Nov 15 (SMM) – 

Copper: LME copper returned to the five-day moving average amid rising hopes for a Brexit deal. It rose to a high of $6,123.5/mt overnight and closed at $6,100/mt. The SHFE 1901 contract also received support at the daily moving average and increased to a high of 49,280 yuan/mt as investors added their longs. However, long-term pressure is expected as the US dollar remains high and the market looks ahead for further interest rates hikes this year. We expect LME copper to trade at $6,050-6,100/mt today with the SHFE 1901 contract at 48,700-49,200 yuan/mt. Spot premiums are set at 50-110 yuan/mt on the last trading day before delivery.  

Aluminium: As longs and shorts fought, the SHFE 1901 contract mostly hovered around the daily moving average with the highest level overnight at 13,785 yuan/mt. It settled below the five-day moving average at 13,680 yuan/mt. LME aluminium faced pressure as it grew to a high of $1,948/mt. Limited upward momentum saw it close at $1,942/mt, still below the five- and 10-day moving averages. It is likely to trade at $1,920-1,960/mt today with its SHFE counterpart trading at 13,700-13,800 yuan/mt. Spot offers are seen at a discount of 20 yuan/mt to a premium of 20 yuan/mt. 

Zinc: LME zinc regained its initial losses overnight as a weaker US dollar and a surge of longs pulled it above the $2,500/mt level near closing. It ended Wednesday’s session 0.36% higher at $2,507/mt. The SHFE 1901 contract extended its weak trend during the day with limited downward room. It rebounded from a low of 20,630 yuan/mt and settled at 20,940 yuan/mt, with open interests down 3,812 lots to 220,000 lots. We expect it to continue to trade rangebound at 20,650-21,100 yuan/mt today, with LME zinc hovering at $2,475-2,525/mt. 

Nickel: As the US dollar dipped from 16-month highs overnight, LME nickel tested pressure above at $11,350/mt several times. However, unsustained upward momentum lowered it to around the daily moving average, and closed it at $11,305/mt. LME nickel stocks shrank 294 mt to 216,306 mt. The SHFE 1901 contract also came off from a high of 94,510 yuan/mt and closed around the daily moving average at 94,200 yuan/mt. Slower-than-expected domestic demand is likely to see the contract trade at 93,500-95,000 yuan/mt today, with LME nickel hovering around $11,300/mt. Spot prices are seen at 94,500-105,500 yuan/mt today. 

Lead: LME lead stopped its decline overnight as it settled higher on the day at $1,949/mt, with open interests up 1,671 lots to 114,310 lots. The SHFE 1901 contract rose above all moving averages to a high of 18,190 yuan/mt. It closed at 18,165 yuan/mt, and will likely maintain its rangebound pattern to the year-end.  

Tin: Maintenance at a smelter in Gejiu of Yunnan province grew market confidence, buoying the SHFE 1901 contract to a high of 153,490 yuan/mt last night. It will continue to trade robustly today with resistance at 155,000 yuan/mt. Stronger SHFE tin contracts bolstered its LME counterpart, which increased to a high of $19,395/mt and settled at $19,335/mt. We expect it to test pressure above at $19,400/mt today.