SMM Morning Comments (Jan 17)

SHANGHAI, Jan 17 (SMM) –

Copper: Continued economic expansion in most of the US, indicated in the Federal Reserve's Beige Book and greater market confidence pulled LME copper close to the Bollinger middle band. It ended at $5,976/mt after increased to a high of $5,990/mt. The SHFE 1903 contract found technical support and closed at 47,310 yuan/mt, with open interests growing 1,914 lots. It is expected to trade at 47,200-4,750 yuan/mt with its LME counterpart at $5,950-5,990/mt today. Pre-holiday slow purchases will see spot premiums at 70-120 yuan/mt today. 

Aluminium: Limited upward momentum settled LME aluminium at $1841/mt, around the five-day moving average. Open interests lost 13,515 lots with longs accounting for the majority. The SHFE 1902 contract traded more robustly as it received support from the 10-day moving average after fell to a low of 13,375 yuan/mt. Outlook on pre-CNY downstream demand improved, and this ended the contract at 13,390 yuan/mt. However, downward room in costs is likely to keep it trading rangebound at 13,320-13,420 yuan/mt today, with LME aluminium at $1,825-1,855/mt. Spot discounts are set at 70-30 yuan/mt. 

Zinc: LME zinc broke pressure at the 20-day moving average and tested the Bollinger middle band amid macroeconomic optimism. Robust US stock market and higher oil prices buoyed market sentiment. LME zinc settled at $2,504/mt after rose to a high of $2,506.5/mt. It is likely to hover within $2,470-2,515/mt today. The SHFE 1903 contract stood above all moving averages but found pressure at 21,000 yuan/mt. Policy stimulus is likely to provide confidence in the market, and support the price at 20,650-21,050 yuan/mt today.   

Nickel: LME nickel came off to close flat overnight after it jumped to a high of $11,770/mt. Open interests lost 11,000 lots while LME nickel inventory accumulated 3,426 mt. The SHFE 1905 contract rebounded from a low of 92,720 yuan/mt and ended slightly higher overnight at 92,910 yuan/mt as shorts left. Today, it is likely to trade at 92,500-93,500 yuan/mt with LME nickel trading at $11,500-11,700/mt. Spot prices are expected at 92,500-93,500 yuan/mt. 

Lead: LME lead faced heavy pressure from the $2,000/mt level, with a high overnight at $1,988.5/mt. The SHFE 1902 contract rallied above the daily moving average and settled at 17,605 yuan/mt as shorts exited. However, limited support from longs will keep it trading rangebound today. 

Tin: Supported by global tight supplies of spot tin, LME tin remained above all moving averages despite a small decline of $150/mt overnight. It closed at $20,525/mt and will receive support at the $20,100/mt level in the short run. The SHFE 1905 contract also closed lower as its LME counterpart dipped from highs. Support below is set at 147,000 yuan/mt.