SMM Morning Comments (Nov 27)

SHANGHAI, Nov 27 (SMM) – 

Copper: LME copper received support at the 20- and 60-day moving averages, after it tested support at $6,155/mt several times overnight as the US dollar strengthened. It settled 0.07% higher on the day and may trade at $6,160-6,210/mt today. The SHFE 1901 contract rallied from a low of 48,650 yuan/mt, but failed to stand above the Bollinger middle band. It closed at 49,290 yuan/mt, with open interests up 7,934 lots to 527,000 lots. A technical rebound is expected in the contract in the short run. It will trade at 48,900-49,400 yuan/mt today, with spot premiums firm at 60-130 yuan/mt. 

Aluminium: Slower depletion in social inventories of primary aluminium, coupled with lower prices of alumina declined the SHFE 1901 contract, once below the five- and 10- day moving averages. As greater capacity cuts across aluminium smelters for heating season provided some support, the contract rebounded above the 10-day moving average and settled at 13,780 yuan/mt. LME aluminium settled at the highest overnight at $1,949/mt as longs entered the market near closing. It is expected to test support at the 10-day moving average and trade at $1,930-1,950/mt today. The 1901 contract will also test support below at the 10-day moving average. 

Zinc: The SHFE 1901 contract registered the sixth consecutive trading day of decline as it slumped 1.72% on the day and closed at 20,245 yuan/mt, with shorts dominating the market. Improved risk aversion supported LME zinc, after a lower SHFE 1901 contract pulled it to a low of $2,446/mt. LME zinc closed lower at $2,485/mt. While several moving averages above weighed on prices, current low-level zinc stocks at LME warehouses also provided some support. LME zinc is likely to trade at $2,470-2,515/mt with the SHFE 1901 contract trading at 20,050-20,500 yuan/mt today. 

Nickel: A buoyant mood ahead of this week's G-20 summit in Argentina bolstered LME nickel and the SHFE 1901 contract on the day. A stronger US dollar on expectations of further interest rate hikes limited the increase. We expect LME nickel to hover weakly around $10,850/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: A higher US dollar above 97, together with heavy pressure above at several moving averages, weighed LME lead to a low of $1,925.5/mt during the European trading session. It settled at $1,948/mt, and may fall below support at the $1,900/mt in the short run. The SHFE 1901 contract received strong support at 18,000 yuan/mt overnight, despite pressure from a lower LME lead. The contract is unlikely to fall further today. 

Tin: LME tin traded robustly with a high of $18,850/mt after a slump last Friday night. It closed at $18,800/mt and will face pressure at that level today. The SHFE 1901 contract stopped its drop after five consecutive days of decline, as it grew 1,460 yuan/mt on the day to settle at 146,440 yuan/mt. We see it trading robustly, rangebound today with resistance above at 148,000 yuan/mt.