SMM Morning Comments (Jan 30)

SHANGHAI, Jan 30 (SMM) –

Copper: An overnight jump in US crude oil prices, followed US sanctions on Venezuela, which would curb the country’s crude exports, buoyed copper prices. LME copper rose to close at $6,062.5/mt on Tuesday. After a higher open, the SHFE 1903 contract climbed to a high of 47,920 yuan/mt overnight. It closed higher at 47,820 yuan/mt. Stagnant consumption, caused by the Chinese New Year holiday, would grow inventories in China. This might pressure copper prices, on the backdrop of macroeconomic optimism. LME copper is expected to trade at $6,030-6,090/mt today with the SHFE 1903 contract at 47,500-47,850 yuan/mt. Spot discounts are seen at 200-110 yuan/mt.

Aluminium: After hovering in a tight range above the daily moving average during Asian trading hours, LME aluminium broke through the 10-, five- and 40-day moving averages to a high of $1,901/mt during European trading hours. It finished Tuesday higher at $1,898/mt, and is expected to trade rangebound at $1,880-1,905/mt today. The SHFE 1903 contract strengthened to close at 13,500 yuan/mt overnight, and is expected to hover at 13,450-13,580 yuan/mt today. Spot discounts are seen at 90-50 yuan/mt.

Zinc: As longs covered their positions, LME zinc pared earlier gains to close Tuesday 0.8% lower at $2,657.5/mt. Two-day declines sent the contract below the upper Bollinger band, but support remains from low inventories. LME zinc is expected to trade at $2,635-2,685/mt today. The SHFE 1903 contract initially extended gains to a high of 21,875 yuan/mt overnight. It then erased those gains to close slightly lower at 21,710 yuan/mt. Investors traded cautiously ahead of the CNY break. The contract is expected to trade at 21,500-21,900 yuan/mt today.

Nickel: Rising on a surge in crude prices, LME nickel shrugged off resistance at several levels to a high of $12,200/mt before it closed at $12,145/mt. The SHFE 1905 contract opened higher and extended gains to finish overnight trading hours at 96,660 yuan/mt. LME nickel is likely to inch up and trade at $12,000-12,300/mt today with the SHFE 1905 contract at 96,000-97,500 yuan/mt. Spot prices are seen at 95,000-97,000 yuan/mt.

Lead: Another decline in LME lead inventories pushed the LME three-month lead contract to the day’s high of $2,095/mt on Tuesday. The contract later lost those gains to end marginally lower at $2,078/mt, which showed signs of waning upward momentum. Despite a higher open, the SHFE 1903 contract weakened overnight, ending 0.4% lower at 17,630 yuan/mt. With thin trades ahead of CNY, LME lead is likely direct its SHFE counterpart.

Tin: LME tin traded rangebound on Tuesday, ending higher at $20,705/mt. It is expected to remain rangebound in the near term with resistance at $21,000/mt and support at $20,400/mt. The SHFE 1905 contract inched up to close at 147,820 yuan/mt overnight. CNY kept investors cautious. Support is seen at 147,000 yuan/mt for the contract.