SMM Morning Comments (Jan 29)

SHANGHAI, Jan 29 (SMM) –

Copper: An overnight slump in US crude and a gain of 200 mt in LME copper stocks weighed on copper prices. LME copper weakened to end at $5,989/mt on Monday. The SHFE 1903 contract fell to close at 47,400 yuan/mt overnight. This sent SHFE copper back to the range last week. Copper prices are expected to trade rangebound today. LME copper is likely to trade at $5,970-6,030/mt with the SHFE 1903 contract at 47,100-47,600 yuan/mt. Spot discounts are seen wider at 80-180 yuan/mt following overnight declines in prices of futures.

Aluminium: LME aluminium fell past the 40-, five- and 10-day moving averages to close at $1,868/mt after it jumped above the 60-day moving average to a day-high of $1,914/mt. It is expected to weaken in a range of $1,845-1,880/mt today. The SHFE 1903 contract fell to close at the session-low of 13,405 yuan/mt overnight. SMM retains the expectations that SHFE aluminium would remain rangebound ahead of Chinese New Year. The contract is likely to trade at 13,350-13,450 yuan/mt today with spot discounts at 90-50 yuan/mt.

Zinc: LME zinc erased earlier gains to close Monday slightly lower at $2,678/mt, after it rose for eight consecutive trading days. Continued declines in LME zinc inventories and high proportion of cancelled warrants are not enough to bolster LME zinc to break through resistance ahead. It is expected to trade at $2,650-2,700/mt today. The SHFE 1903 contract traded in a tight range overnight and closed at 21,740 yuan/mt. As CNY approached, social inventories of refined zinc across Shanghai, Guangdong and Tianjin grew. The SHFE 1903 contract is likely to consolidate at highs today with a trading range of 21,450-21,900 yuan/mt.

Nickel: As crude oil prices dropped, LME nickel weakened on Monday, ending at $11,845/mt. The SHFE 1905 contract fluctuated to finish overnight lower at 94,840 yuan/mt. LME nickel is expected to trade rangebound at $11,750-12,000/mt today with the SHFE 1905 contract at 94,000-95,500 yuan/mt. Spot prices are seen at 94,500-97,000 yuan/mt.

Lead: Continued declines in LME lead inventories stoked worries about supplies, bolstering LME lead to a near five-month high at $2,129/mt on Monday. As longs took profits, the contract later lost those gains and closed 1.3% lower at $2,079.5/mt. Losses in LME lead prompted the SHFE 1903 contract to come off from initial highs overnight, ending 0.3% lower at 17,695 yuan/mt. Open interest for the contract shrank 1,638 lots to 44,080 lots. The contract is likely to hover in a tight range ahead of the CNY break as investors held back from trading.

Tin: LME tin traded rangebound around the five- and 10-day moving averages on Monday, closing higher at $21,615/mt. It is likely to remain rangebound in the short run with resistance at $20,800/mt and support at $20,200/mt. The SHFE 1905 contract traded rangebound between the five- and 60-day moving averages overnight as investors were cautious ahead of the CNY break. It ended slightly higher at 147,820 yuan/mt. Support is seen at 147,000 yuan/mt.