SMM Morning Comments (Nov 26)

SHANGHAI, Nov 26 (SMM) – 

Copper: LME copper dipped below the five-day moving average to the Bollinger middle band, pressured by a higher US dollar and lower prices of US crude oil. It closed at $6,168/mt, with resistance at the daily moving average. The SHFE 1901 contract also faced pressure above at 49,370 yuan/mt. It settled at 49,360 yuan/mt after it rose to a high of 49,450 yuan/mt. We expect it to trade weakly at 49,100-49,500 yuan/mt, with its LME counterpart trading at $6,140-6,190/mt today. Spot sellers will continue to firm up premiums to 60-130 yuan/mt today. 

Aluminium: As longs left the market, the SHFE 1901 contract declined below the five-day moving average to a low of 13,735 yuan/mt last Friday night. Sluggish demand and weaker support from lower prices of alumina saw the contract face heavy pressure at the 20-day moving average. It will trade at 13,750-13,850 yuan/mt today with spot discounts at 50-10 yuan/mtLower prices of oil and weaker macro sentiment lowered LME aluminium 0.33% lower on the day at $1,942/mt. It is likely to hover around the five- and 10-day moving averages, and test support at the 10-day moving average today. 

Zinc: LME zinc slumped below all moving averages last Friday night as slower-than-expected growth in eurozone economic data grew bearish market sentiment. As pessimism eases today, LME zinc is expected to trade at $2,490-2,540/mt. The SHFE 1901 contract registered the fifth consecutive trading day of decline as it closed 1.32% lower after it fell to a month-low of 20,335 yuan/mt. It is likely to cease falling and trade at 20,350-20,850 yuan/mt today. 

Nickel: Macroeconomic pessimism lowered LME nickel last Friday night to $10,875/mt, with support at the $10,740/mt level. While base metals fell for the most part on a higher US dollar, the SHFE 1901 contract rebounded after it dipped below 90,000 yuan/mt. It closed 1.11% higher at 90,100 yuan/mt, with open interests down 38,000 lots to 330,000 lots. We expect LME nickel to hover weakly around $10,800/mt, with the 1901 contract trading at 88,000-90,000 yuan/mt today. Spot prices are seen at 89,000-100,000 yuan/mt today.

Lead: LME lead rebounded after it dipped to a low of $1,947/mt as the US dollar gained. It will continue to trade weakly, rangebound in the short run. The SHFE 1901 contact stopped declining near closing and broke pressure at the daily moving average, closing at 18,320 yuan/mt, down 0.68% on the day. It is likely to extend the rise today, with limited downward room. 

Tin: A pessimistic outlook on tin demand in China and a stronger US dollar weighed on LME tin, which closed at a three-month low of $18,520/mt, down 3.89% on the day. On Friday November 23, the International Tin Association reported that poor demand in China is likely to account for an oversupply of up to 500 mt in 2019. LME tin pulled the SHFE 1901 contract to a low of 144,210 yuan/mt. It may test the 142,500 yuan/mt level if it failed to receive support at 145,000 yuan/mt today.