SMM Morning Comments (Nov 19)

SHANGHAI, Nov 19 (SMM) – 

Copper: LME copper returned above all moving averages and stood firm at the Bollinger middle band. Long positions increased for five consecutive trading daysand buoyed LME copper to a high of $6,278.5/mt last Friday night. It is likely to trade at $6,200-6,250/mt with further upward room in the short run. The SHFE 1901 contract rallied from a low of 49,400 yuan/mt as the US dollar weakened, and settled at 49,570 yuan/mt after it rose to a high of 49,720 yuan/mt. Shrinking copper inventories across both LME and SHFE warehouses also supported prices. We expect the contract to trade at 49,400-49,900 yuan/mt today with spot premiums at 20-100 yuan/mt. 

Aluminium: Weak fundamentals saw LME aluminium unsuccessfully test pressure around $1,947/mt twice last Friday night. With support below, it rebounded after it dipped below the Bollinger lower band, and settled slightly up on the day at $1,947/mt. The SHFE 1901 contract remained below the five- and 10-day moving averages last Friday night. It received support at 13,730 yuan/mt and closed at 13,760 yuan/mt. We expect it to trade at 13,700-13,800 yuan/mt today with its LME counterpart at $1,910-1,960/mt. Spot discounts are set at 60-20 yuan/mt today. 

Zinc: Macroeconomic optimism and a softened US dollar buoyed LME zinc to a high of $2,629/mt. It settled 1.91% higher on the day at $2,617/mt. The SHFE 1901 contract also traded robustly, bolstered by rising longs, and closed at 21,675 yuan/mt after it rose to a high of 21,705 yuan/mt. It is expected to trade at 21,450-21,900 yuan/mt today with its LME counterpart at $2,600-2,650/mt. 

Nickel: LME nickel came off from highs around $11,835/mt during the European trading session and fell back to the daily moving average, settling at $11,395/mt. The SHFE 1901 contact faced pressure at the 95,000 yuan/mt level after it rose to a high of 94,990 yuan/mt. Rising inventories at eastern warehouses eroded upward momentum in prices. Stocks of refined nickel in east China expanded for three consecutive weeks. We expect LME nickel to hover around $11,300/mt today with the SHFE 1901 contract trading at 93,500-95,000 yuan/mt today. Spot prices are seen at 94,000-105,500 yuan/mt.

Lead: LME lead surged above all moving averages to a high of $2,014.5/mt as the US dollar dipped. It closed 2.54% higher on the day at $1,995/mt, with open interests up 2,329 lots to 116,254 lots. It is likely to trade at $1,970-2,010/mt today, with the SHFE 1901 contract trading at 18,150-18,350 yuan/mt. The contract will test resistance above at 18,430 yuan/mt in the short run. Spot prices in the Shanghai market are set at 18,600-18,700 yuan/mt today. 

Tin: The SHFE 1901 contract failed to extend its daytime decline last Friday night as it hovered at highs and settled at 153,350 yuan/mt. This supported its LME counterpart to inch up on the day at $19,400/mt. LME tin may manage to stand above that level today, and the SHFE 1901 contract will test pressure above at 155,000 yuan/mt in the short run.