SHANGHAI, Jan 28 (SMM) –
Copper: Shorts exited the market as the US dollar fell to a week-low last Friday, and this buoyed LME copper to the highest in a month and a half, at $6,080/mt near closing. A higher euro also pulled up copper prices. The SHFE 1903 contract traded robustly as it climbed to a high of 47,900 yuan/mt and ended at 47,880 yuan/mt, with open interests in all SHFE copper contracts down 2,232 lots to 598,000 lots. However, weak consumption ahead of CNY and pressure from accumulated inventories will limit any upward momentum in copper prices today. The 1903 contract is likely to trade at 47,300-47,900 yuan/mt today with LME copper at $6,000-6,080/mt. Spot discounts are set to deepen to 110-50 yuan/mt as higher prices of futures deter downstream purchases.
Aluminium: Following losses in the US dollar, LME aluminium shrugged off resistance at the 60-day moving average to the day’s high of $1,919/mt before it lost some gains to end at $1,905/mt. It is expected to weaken in a range of $1,880-1,905/mt today after the US on Sunday lifted sanctions on aluminum giant Rusal and other Russian firms linked to oligarch Oleg Deripaska. The SHFE 1903 contract pared some earlier gains to close at 13,585 yuan/mt on Friday night as some longs took profits after the contract rose to a high of 13,610 yuan/mt. The contract is expected to trade rangebound at 13,480-13,580 yuan/mt today with spot discounts at 80-40 yuan/mt.
Zinc: LME zinc rose to a high of $2,656.5/mt after the proportion of cancelled warrants of LME zinc inventories jumped above 50%, which triggered worries about supplies. The temporary reopening of the US government improved risk appetite among investors, and weighed on the US dollar index and bolstered LME zinc. The contract climbed to end at $2,682/mt, up 2.1% on the day. LME zinc is expected to consolidate at $2,640-2,690/mt today. As longs loaded up their bets, the SHFE 1903 contract climbed to close at 21,805 yuan/mt on Friday night. Consumption is nearly stagnant ahead of CNY, which would grow inventories, while positive sentiment from macroeconomic developments faded. Longs are unlikely to continue to add bets. The SHFE 1903 contract is expected to trade at 21,400-21,900 yuan/mt today.
Nickel: As the US dollar weakened, LME nickel received support at the five-day moving average, and jumped to a high of $11,990/mt during the European trading session. The SHFE 1905 contract rebounded from a low of 94,540 yuan/mt, to a two-month high of 95,600 yuan/mt last Friday night. It settled over 1% higher at 95,530 yuan/mt with open interests up 12,000 lots to 302,000 lots. Today, we expect the contract to trade at 94,500-96,000 yuan/mt and its LME counterpart at $11,800-12,000/mt. Spot prices are set at 95,000-96,000 yuan/mt.
Lead: Continued declines in LME lead inventories prompted longs to add their bets on Friday, pushing LME lead towards a nearly four-month high during European trading hours. The contract finished the trading day 1.6% higher at $2,106/mt. Supported by its LME counterpart, the SHFE 1903 contract moved higher to close at 17,785 yuan/mt on Friday night. The unwinding of short positions accounted for the majority gains in SHFE lead, indicating limited upward momentum in the contract.
Tin: Market concerns over Indonesian tin supply eased, and this lowered LME tin from a high of $20,985/mt to $20,600/mt last Friday night. We expect it to test support at $20,600/mt, or $20,100/mt in the short run. Weaknesses in LME tin weighed on the SHFE 1905 contract, which dipped after opened at 148,250 yuan/mt to a low of 147,530 yuan/mt. It will test support at the 147,000 yuan/mt level amid cautious investors ahead of CNY.