SMM Morning Comments (Feb 15)

Published: Feb 15, 2019 09:39 (GMT+8)

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SMM Morning Comments

SHANGHAI, Feb 15 (SMM) –

Copper: LME copper came off from a high of $6,195/mt to a low of $6,105/mt before it ended Monday at $6,137/mt. As shorts added their positions, the SHFE 1904 contract pulled back from earlier highs overnight, closing lower at 48,340 yuan/mt. The sharp drop in US December retail sales data spurred concerns about demand, weighing on prices of crude oil and copper. An overnight retreat in the US dollar is likely to provide some support to copper prices today. LME copper is expected to trade at $6,100-6,160/mt with the SHFE 1904 contract at 48,150-48,650 yuan/mt. Spot premiums are seen wider at 50-150 yuan/mt as the front-month contract is about to expire.

Aluminium: LME aluminium fell to $1,846/mt on Thursday, a low since January 22, before it closed at $1,849.5/mt. As the US dollar remains at highs, LME aluminium is expected to trade at $1,820-1,870/mt today. The SHFE 1903 contract lost 0.3% to finish overnight at 13,345 yuan/mt. It is expected to remain rangebound before the fundamentals improve. The contract is likely to trade at 13,300-13,400 yuan/mt today. Spot prices are seen at discounts of 20 yuan/mt to premiums of 20 yuan/mt on the last trading day of the 1902 contract.

Zinc: LME zinc extended its losses to end at $2,590/mt on Thursday, posting a five-day losing streak. LME zinc inventories fell below 100,000 mt, which might offer some support to LME zinc, which is expected to stem declines today with most transactions occurring at $2,580-2,630/mt. Losses in LME zinc weighed the SHFE 1903 contract to a low of 21,180 yuan/mt overnight, which later recovered some losses to end at 21,330 yuan/mt. The 1904 contract became the most traded SHFE zinc contract overnight. It fell past the 20-day moving average to a low of 21,005 yuan/mt before it closed at 21,150 yuan/mt. Support is seen firmly at the 20-day moving average and 21,000 yuan/mt in the short run, where shorts are likely to cover positions to take profits. With trade optimism, the SHFE 1904 contract is expected to recover and trade at 21,050-21,550 yuan/mt today.

Nickel: A decline in crude prices dragged LME nickel past the 20-day moving average to a low of $12,145/mt on Thursday. LME nickel ended lower at $12,195/mt. Following the loss in its LME counterpart, the SHFE 1905 contract tumbled to a low of 96,860 yuan/mt overnight before short-covering pushed it to close at 97,560 yuan/mt. LME nickel is expected to hover around $12,300/mt today with the SHFE 1905 contract at 97,000-98,500 yuan/mt. Spot prices are seen at 97,500-99,000 yuan/mt.

Lead: LME lead stemmed recent declines and climbed to close at $2,037/mt on Thursday, reflecting that support at the 40-day moving average sustained. The SHFE 1903 contract recovered from earlier losses to end higher at 16,860 yuan/mt overnight.

Tin: LME tin fell through the five- and 10-day moving averages to end at $20,910/mt on Thursday. LME tin inventories shrank to lows, which is likely to support LME tin. LME tin is expected to trade rangebound at highs in the near term with resistance at $21,300/mt. The SHFE 1905 contract rallied from earlier lows overnight, ending at 148,740 yuan/mt. It is expected to remain rangebound today with resistance at 149,000 yuan/mt and support at 147,000 yuan/mt.

Morning comments Copper Aluminium Zinc Lead Nickel Tin

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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