SMM Morning Comments (Nov 21)

SHANGHAI, Nov 21 (SMM) – 

Copper: As a stronger US dollar lowered base metals across the board last night, LME copper ended its six consecutive trading days of gains. It settled below the Bollinger middle band at $6,173/mt, 1.31% lower on the day. The SHFE 1901 contract slumped to a low of 48,740 yuan/mt as shorts accumulated, and closed at 49,130 yuan/mt. Persisting worries about the China-US trade conflict are expected to kept investors cautious today. We see the contract trading at 48,800-49,400 yuan/mt today with its LME counterpart at $6,150-5,200/mt. Spot premiums are set at 50-130 yuan/mt as sellers firm up offers. 

Zinc: LME zinc failed to receive continued support at the 40-day moving average, pressured by a rebounded US dollar index. A sell-off in global stock markets grew market pessimism, and this settled LME zinc 2.4% lower at $2,541.5/mt. We expect it to regain part of the losses today and trade at $2,520-2,570/mt. The SHFE 1901 contract slumped in line with LME zinc, as it fell below the 60-day moving average at one point and closed at 21,015 yuan/mt. It is expected to stop declining and trade at 20,850-21,350 yuan/mt today. 

Nickel: Depression from the macroeconomy and weak fundamentals lowered LME nickel and the SHFE 1901 contract by 0.94% and 1.51%, respectively, last night. The contract once dipped to the lowest within the year at 91,510 yuan/mt. We expect LME nickel to hover around $11,000/mt today with the SHFE 1901 contract trading at 91,500-93,000 yuan/mt today. Spot prices are seen at 92,000-104,000 yuan/mt.

Lead: As the US dollar strengthened, LME lead dipped from a high of $2,008/mt, falling back to the 10-day moving average. It settled at $1,959/mt and may consolidate around that level today. The SHFE 1901 contract closed slightly lower on the day at 18,155 yuan/mt as it also dipped back to around the 10-day moving average. It will continue to trade rangebound today. 

Tin: The SHFE 1901 contract was dragged down by a weaker LME tin overnight, after a sell-off in global stock markets supported the safe-haven greenback. LME tin will test support at $19,000/mt with the SHFE 1901 contract testing support at the 150,000 yuan/mt level today.