SMM Morning Comments (Feb 11)

SHANGHAI, Feb 11 (SMM) –

Chinese financial markets will have their first trading day today after the week-long Chinese New Year break.

Copper: LME copper rallied from a low of $6,090.5/mt on Monday to a high of $6,289.5/mt on Thursday, resulting in overall gains for the week. The Fed’s dovish tone and lower spot copper concentrate treatment charges underpinned copper prices. Post-holiday demand is likely to bolster copper prices. LME copper is expected to trade at $6,190-6,260/mt today with the SHFE 1903 contract at 48,100-48,550 yuan/mt. Spot discounts are seen up to 50 yuan/mt.

Aluminium: LME aluminium erased earlier gains to close near the day’s low on Friday, at $1,878/mt. It is expected to trade at $1,870-1,900/mt today.

Zinc: LME zinc came off from earlier highs and posted the first weekly decline last week after four consecutive weeks of gains. The contract ended at $2,699/mt last Friday. Even as low inventories continued to offer support, macroeconomic uncertainties prompted investors to be cautious. LME zinc is expected to trade rangebound today with a range of $2,670-2,720/mt. Losses in LME zinc, uncertain post-holiday consumption and anticipated gains in inventories are set to erode upward momentum in SHFE zinc and the SHFE 1903 contract is expected to trade at 21,850-22,400 yuan/mt today.

Nickel: LME nickel dropped to close at $12,575/mt on Friday and posted a weekly decline last week. As downstream consumption has yet to recover, nickel prices are expected to trade rangebound today. LME nickel is likely to trade at $12,400-12,600/mt with the SHFE 1905 contract at 99,300-100,000 yuan/mt. Spot prices are seen at 98,000-100,000 yuan/mt.

Lead: LME lead recovered from earlier losses to trade 0.5% higher at $2,089.5/mt on Friday. We expect downside room for the contract in the near term with pressure at the five- and 10-day moving averages.

Tin: LME tin finished last Friday 0.6% higher at $21,050/mt. Tighter supplies supported tin prices. LME tin faces resistance at the $21,000/mt level with next resistance at the $22,000/mt level. Gains in LME tin are expected to provide some support to its SHFE counterpart today.