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SMM Morning Comments (Jan 22)

iconJan 22, 2019 09:53
Source:SMM
SMM Morning Comments

SHANGHAI, Jan 22 (SMM) –

Copper: A higher US dollar limited upward momentum in LME copper, which faced pressure at the daily moving average and failed to receive support at the $6,005/mt level. An overnight accumulation of LME copper inventories also weighed on prices. A buildup of shorts lowered the SHFE 1903 contract to a low of 47,600 yuan/mt. It closed at 47,710 yuan/mt with open interests up 5,356 lots to 567,000 lots. Pressure from shorts is likely to continue to lower copper prices today. The 1903 contract is likely to trade at 47,300-47,700 yuan/mt, and LME copper will trade at $5,950-6,000/mt for LME copper today. Lower prices of futures are likely to keep spot offers between a discount of 40 yuan/mt to a premium of 10 yuan/mt today. 

Aluminium: LME aluminium came off from a high of $1,886/mt during the European session, as it fell below the 20- and five-day moving averages but found support at the 10-day moving average. Weak fundamentals are likely to keep it trading at $1,840-1,865/mt today. The SHFE 1902 contract hovered weakly below the daily moving average, as shorts dominated the market. We expect the contract to trade at 13,420-13,520 yuan/mt with spot discounts of 90-50 yuan/mt. 

Zinc: LME zinc unsuccessfully tested pressure at the Bollinger upper band, or the $2,600/mt level, twice overnight. It closed slightly lower at $2,578/mt. Shrinking LME zinc inventories will keep prices at $2,550-2,600/mt today. The SHFE 1903 contract hovered at highs as investors added their longs. The contract will see limited upward room today, trading at 21,300-21,750 yuan/mt. 

Nickel: While base metals settled mixed overnight, SHFE 1905 continued to lead the increase and closed 0.64% higher at 95,360 yuan/mt. This followed after longs pulled it up to a high of 95,720 yuan/mt. LME nickel consolidated around the daily moving average, with a high of $11,885/mt. Nickel stocks across LME warehouses extended declines by 762 mt to 200,466 mt. Today, we expect it to trade at $11,750-11,900/mt, with the SHFE 1905 contract at 94,500-96,000 yuan/mt. Spot prices are set at 94,500-96,000 yuan/mt. 

Lead: A decline of over 6,000 mt in LME lead inventories buoyed LME lead above $2,000/mt, to a high of $2,017/mt. The SHFE 1903 contract mostly traded along the five-day moving average, with pressure at the 40-day moving average. A recent improvement across SHFE base metals may support lead prices in the short run. 

Tin: LME tin climbed after opening, mostly consolidating at highs overnight. It is likely to maintain the trend today with support at $20,200/mt and resistance at $20,800/mt. A higher LME tin lifted its SHFE counterpart, to a high of 149,140 yuan/mt as longs entered. The 1905 contract closed at 148,640 yuan/mt with open interests up 1,434 lots. Resistance above is set at 149,000 yuan/mt in the short run. 

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