SMM Morning Comments (Mar 11)

SHANGHAI, Mar 11 (SMM) – 

Copper: Weaker-than-expected US job growth expanded upward room of LME copper, which broke pressure at the daily moving average and jumped to a high of $6,410.5/mt. However, continued resistance at the five- and 10-day moving averages ended it at $6,395.5/mt, with open interests down 1,318 lot to 296,000 lots. With support at the 40- and 60-day moving averages, it is expected to trade at $6,370-6,430/mt today. The SHFE 1905 contract also came off from a high of 49,130 yuan/mt, and closed at 49,030 yuan/mt. It is likely to trade at 48,800-49,250 yuan/mt today with spot discounts at 150-40 yuan/mt. 

Aluminium: LME aluminium faced pressure from the 10-day moving average after it rose to a high of $1,888.5/mt last Friday night. As the MACD green line expanded and the US dollar remained at highs, it is expected to trade at $1,840-1,900/mt today. The SHFE 1905 contract rebounded after shorts weighed it to a low of 13,490 yuan/mt. It settled at 13,505 yuan/mt as longs entered near closing. Today, the contract is expected to trade at 13,350-13,800 yuan/mt with spot discount at 50-10 yuan/mt. 

Zinc: With poorer-than-expected US nonfarm payroll data, LME zinc rallied after it fell below support at the 20-day moving average, or the $2,700/mt level, to a low of $2,684/mt. It stood firm above $2,700/mt, and closed at $2,718.5/mt. Though LME zinc inventories shrank below 60,000 mt, their support for prices will wane. Significant pressure from the US dollar may see it at $2,700-2,750/mt today. The SHFE 1905 contract continued to receive support from the 40-day moving average, and the 21,000 yuan/mt level last Friday night. Amid a slow recovery of domestic demand, it is expected to trade at 21,000-21,450 yuan/mt today. 

Nickel: LME nickel hovered above the daily moving average, with pressure at $13,200/mt, before it dipped below the $13,100/mt level and ended at $13,080/mt. The SHFE 1905 contract found support at 102,000 yuan/mt as domestic inventories stayed at lows. It is forecasted to trade at 101,500-103,000 yuan/mt today, with its LME counterpart testing support at $13,000/mt. Spot prices are set at 102,000-104,000 yuan/mt. 

Lead: LME lead broke support at the $2,100/mt level as it dipped to a low of $2,085/mt. Ending at $2,091/mt, it is expected to move downward and test support below. The SHFE 1904 contract showed limited sign of stopping decline as bearish sentiment dragged it below the 10-day moving average, and settled it at a low of 17,370 yuan/mt. Further downward room is expected today. 

Tin: A robust US dollar and low inventories of tin across LME warehouses kept LME tin at highs, with the lowest level at $21,370/mt last Friday night. With resistance at the five-day moving average and support at the 20-day moving average, it is expected to test support at $21,300/mt today. The SHFE 1905 contract consolidated above the daily moving average. It unsuccessfully tested pressure at the 60-day moving average, and closed at 147,640 yuan/mt. We expect it to trade rangebound, weakly today.