SMM Morning Comments (Feb 14)

SHANGHAI, Feb 14 (SMM) –

Copper: After initial gains, LME copper fell to a day-low of $6,111/mt on Wednesday. It recovered those losses to end 0.3% higher at $6,144/mt. The SHFE 1904 contract fluctuated to close higher at 48,250 yuan/mt overnight. US-China trade optimism was not enough to substantially shore up copper prices. An overnight rebound in the US dollar might weigh on copper prices today. LME copper is expected to trade at $6,100-6,180/mt with SHFE copper at 48,000-48,400 yuan/mt. As the February contract is about to expire, offers of spot cargoes are likely to be close to prices of futures. Spot premiums are seen up to 70 yuan/mt.

Aluminium: LME aluminium traded higher on Wednesday after six consecutive days of losses. It ended 0.5% higher at $1,865/mt and is expected to trade at $1,840-1,880/mt today. The SHFE 1903 contract climbed to close at 13,350 yuan/mt overnight and is likely to trade at 13,330-13,450 yuan/mt today. Spot discounts are seen at 50-10 yuan/mt.

Zinc: LME zinc traded rangebound and ended higher at $2,610.5/mt on Wednesday. Despite low LME inventories, LME zinc is expected to see limited upside room as spot prices weaken. LME zinc is likely to remain rangebound today with most trades occurring at $2,590-2,640/mt. The SHFE 1903 contract weakened to finish overnight at 21,380 yuan/mt as the anticipation of further gains in inventories reduced sentiment among longs. The contract is expected to remain weak today with a trading range of 21,200-21,700 yuan/mt.

Nickel: LME nickel fluctuated to end lower at $12,400/mt on Wednesday. The SHFE 1905 contract hovered between the five- and 10-day moving averages overnight, closing higher at 98,450 yuan/mt. Today, LME nickel is expected to trade rangebound around $12,400/mt with the SHFE 1905 contract moving at 97,500-99,000 yuan/mt. Spot prices are seen at 98,000-99,500 yuan/mt.

Lead: A rally in the US dollar weighed on LME lead on Wednesday, lowering the three-month contract 1% lower at $2,026/mt. Support was seen at the 40-day moving average. It is expected to consolidate today with thin trades. The unwinding of short positions bolstered the SHFE 1903 contract to a high of 16,875 yuan/mt overnight, which later pared some gains to end at 16,790 yuan/mt. Despite the overnight gain, SHFE lead has yet to stabilise as shorts continued to dominate the market.

Tin: LME tin rose to a high of $21,330/mt on Wednesday before it ended at $21,050/mt. Tighter supplies continued to support LME tin. Resistance is seen at $22,000/mt. The SHFE 1905 contract traded in a tight range and closed overnight marginally higher at 148,610 yuan/mt. Pressure from supplies grew shortly after the Chinese New Year holiday. SHFE tin is expected to remain rangebound today with resistance at 149,000 yuan/mt and support at 147,000 yuan/mt.