SMM Morning Comments (Nov 28)

SHANGHAI, Nov 28 (SMM) – 

Copper: Both LME copper and the SHFE 1901 contract lost support at all moving averages overnight after expectations of gradual interest-rate hikes buoyed the US dollar to the highest in two weeks. With pressure at the Bollinger middle band, LME copper closed at $6,111/mt. The SHFE 1901 contract settled at 48,930 yuan/mt after dipped to a low of 48,620 yuan/mt. While the White House cast doubt on a G20 deal to resolve trade dispute with China, the development will be closely watched. We expect LME copper to trade at $6,080-6,140/mt with the SHFE 1901 contract trading at 48,700-49,100 yuan/mt today. Spot premiums are set at 60-130 yuan/mt on high downstream demand at the end of a month. 

Aluminium: Lower costs of raw materials and poorer downstream demand continued to weigh on the SHFE 1901 contract, despite details of winter cuts on Shandong aluminium producers released Tuesday. The contract closed at 13,705 yuan/mt, after exiting longs pulled it down to a low of 13,695 yuan/mt. LME aluminium settled below all moving averages at $1,924.5/mt. As the US dollar remains at highs, it is expected to trade $1,920-1,940/mt today, with the SHFE 1901 contract at 13,650-13,750 yuan/mt. Spot discounts are set at 80-20 yuan/mt. 

Zinc: As shorts dominated the market, LME zinc dropped to a record low within the month with limited technical support. It lost 2.49% on the day and closed at $2,423/mt. Trading range is set at $2,400-2,445/mt today with support at $2,400/mt. The SHFE 1901 contract registered the seventh consecutive trading day of decline after it struggled to stand above the 20,000 yuan/mt level. It is likely to trade weakly at 19,750-20,200 yuan/mt today. 

Nickel: LME nickel mostly hovered below the daily moving average and dipped to a low of $10,720/mt at one point as the US dollar gained. The SHFE 1901 contract came off from a high of 89,600 yuan/mt as shorts entered the market. Weak fundamentals settled it at 89,200 yuan/mt. Today, we expect LME nickel to hover weakly around its current levels, with the 1901 contract trading at 88,500-90,000 yuan/mt. Spot prices are seen at 89,000-99,800 yuan/mt.

Lead: Pressured by a stronger US dollar, LME lead broke support at $1,900/mt, closing at $1,902.5/mt after slumped to a low of $1,897.5/mt. The SHFE 1901 contract marked a slower drop with continued support at 18,000 yuan/mt. It is likely to test support at that level today.

Tin: A higher US dollar and bearish outlook on slower consumption next year depressed LME tin to the lowest since August 2016. It fell 3.06% on the day and closed at $18,225/mt, with the lowest overnight at $18,145/mt. The SHFE 1901 contract also traded weakly amid cautious sentiment. It will test support below at 142,500 yuan/mt today.