SMM Morning Comments (Nov 20)

Published: Nov 20, 2018 09:38

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SMM Morning Comments

SHANGHAI, Nov 20 (SMM) –

Copper: LME copper registered the fifth consecutive trading day of increase, with support at the 40-day moving average, and settled at $6,255/mt. The SHFE 1901 contract saw improved market sentiment as the US dollar softened when traders reassessed the pace of future US interest rate increases. It rallied to above the 50,000 yuan/mt level and closed at 49,900 yuan/mt. We expect the contract to test the support at 50,000 yuan/mt today, with trading range at 49,700-50,200 yuan/mt. LME copper is likely to trade at $6,220-6,270/mt today. Spot premiums are set at 30-90 yuan/mt amid tight supplies.

Aluminium: The SHFE 1901 contract came off from highs around 13,835 yuan/mt with limited upward momentum. As support remained at the five-day moving average below, the contract settled it at 13,790 yuan/mt after dipped to a low of 13,775 yuan/mt. It is likely to trade at 13,700-13,800 yuan/mt today with resistance at the 10-day moving average. Spot discounts are set at 60-20 yuan/mt. LME aluminium also traded weakly given negative fundamentals. It slid below the daily moving average gradually after a weakened US dollar benefited it to a high of $1,953/mt. It is expected to continue the decline with trading range at $1,920-1,960/mt today.

Zinc: Risk aversion grew as the US stock market slumped, and this lowered LME zinc from a high of $2,647/mt to below the $2,600/mt level. It closed 0.5% lower on the day at $2,604/mt. However, upward momentum is still expected today as the LME zinc stocks continued to shrink. We see it trading at $2,580-2,630/mt today with the SHFE 1901 contract hovering at 21,250-21,650 yuan/mt. Thought domestic supplies stayed relatively tight, market optimism cooled as downstream consumption went sluggish at the year-end.

Nickel: LME nickel led the losses among base metals and closed 1.49% lower on the day, pressured by Federal Reserve officials’ caution over the global growth outlook. Refined nickel inventories in east China had piled up for three consecutive weeks, and this lowered the SHFE 1901 contract by 1.05% overnight. We expect LME nickel to hover around $11,250 /mt today with the SHFE 1901 contract trading at 92,500-94,000 yuan/mt today. Spot prices are seen at 93,000-105,000 yuan/mt.

Lead: The SHFE 1901 contract registered the third consecutive trading day of decline, but received support at 18,235 yuan/mt. LME lead faced heavy pressure above at $2,000/mt, even when a lower US dollar benefited the prices. It closed slightly lower at $1,990.5/mt, with further downward room expected today.

Tin: Buoyed by potential fewer supplies of tin ingot from China, LME tin surged to a high of $19,700/mt and closed 1.44% higher on the day at $19,680/mt. It will test pressure above at $19,700/mt today with next target at $20,100/mt in the short run. The SHFE 1901 contract consolidated above the five-day moving average and registered a slower growth than its LME counterpart. It settled 240 yuan/mt higher at 153,990 yuan/mt, with pressure above expected at 155,000 yuan/mt today.

Morning comments Futures movement

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