SMM Morning Comments (Feb 28)

SHANGHAI, Feb 28 (SMM) –

Copper: A surge in US crude prices prompted investors to add long positions for the three-month LME copper on Wednesday, pushing the contract to a high of $6,531/mt before it closed at $6,520.5/mt. As longs added their positions, the most traded SHFE April copper contract climbed to a high of 50,440 yuan/mt overnight. Losses in its LME counterpart later in the session dragged it off the high to a low of 50,110 yuan/mt. The contract ended overnight slightly higher at 50,240 yuan/mt. Overnight gains in copper prices were also helped by low copper inventories. The five-day moving average and expanding KDJ lines will offer support to LME copper, which is expected to trade at $6,485-6,530/mt today. SHFE copper is likely to trade at 50,000-50,500 yuan/mt with spot discounts at 160-80 yuan/mt.   

Aluminium: As longs loaded up their positions, the three-month LME aluminium rose a three-week high of $1,930/mt on Wednesday, before it ended at $1,922/mt, standing above all short-term moving averages. The rebound in the US dollar index accounted for the losses in LME aluminium later in the session. New market talks of headwinds against the full production recovery of Hydro’s Alunorte alumina refinery in Brazil is likely to buoy LME aluminium today, which is expected to trade at $1,910-1,940/mt. The most liquid SHFE May aluminium contract hovered in a wide range and ended higher at 13,720 yuan/mt overnight. It is expected to trade at 13,650-13,800 yuan/mt today. Spot discounts are seen at 90-50 yuan/mt against the SHFE 1903 contract.

Zinc: The three-month LME zinc recovered from earlier losses to finish Wednesday 0.3% higher at a session high of $2,750/mt. As the US dollar index rebounded overnight, LME zinc is likely to stage a downward correction today after rising for two consecutive days. Low LME zinc stocks, however, would support LME zinc. The contract is expected to trade at $2,715-2,765/mt. With gains in LME zinc, the most active SHFE April zinc contract ticked up overnight, ending at 21,865 yuan/mt. Resistance, however, is strong at the 22,000 yuan/mt level amid expanding domestic inventories. As the market digests recent macroeconomic developments, the SHFE 1904 contract is expected to consolidate at 21,550-22,050 yuan/mt today.

Nickel: Spurred by the rise in oil prices, the three-month LME nickel rebounded from earlier lows to finish Wednesday higher at $13,060/mt. As longs aggressively added and shorts cut their positions, the most liquid SHFE May nickel contract climbed to a high of 102,650 yuan/mt overnight, before the rebound in the greenback weighed on it to end at 102,140 yuan/mt. LME nickel is expected to hover at $12,900-13,100/mt today with SHFE nickel at 101,500-102,500 yuan/mt. Spot prices are seen at 102,000-103,000 yuan/mt.

Lead: A sharp growth in the cancellation of LME lead warrants and a strong open by its SHFE counterpart bolstered the three-month LME lead to a peak in nearly half a year at $2,144/mt on Wednesday. LME lead ended the trading day 1.7% higher at $2,130/mt, posting a six-day winning streak. After a higher open, the most active SHFE April lead contract rose to close at a session high of 17,300 yuan/mt overnight.

Tin: The three-month LME tin dropped to a low of $21,405/mt on Wednesday before it recovered some losses to finish the trading day 0.3% lower at $21,545/mt. Support is seen at the five-day moving average and the $21,300/mt level for LME tin. The most traded SHFE May tin contract traded rangebound and ended 0.2% lower at 150,400 yuan/mt overnight. Support is at the 10-day moving average and the 150,000 yuan/mt level for SHFE tin.