SMM Morning Comments (Mar 12)

Published: Mar 12, 2019 09:19

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SMM Morning Comments

SHANGHAI, Mar 12 (SMM) –

Copper: Oil prices increased after news that Saudi Arabia planned to extend efforts to reduce crude exports. This bolstered market sentiment and rallied prices of copper. Longs pulled LME copper to a high of $6,424.5/mt near closing, after it slid to the lowest overnight at $6,389/mt. The SHFE 1905 contract also rose to a high of 49,350 yuan/mt as longs entered, before it ended at 49,200 yuan/mt. With support at the 20-day moving average, LME copper is likely to trade at $6,390-6,450/mt, with its SHFE counterpart at 49,000-49,500 yuan/mt. Spot sellers may firm up offers up to a premium of 40 yuan/mt today.

Aluminium: LME aluminium dipped to $1,845/mt, the lowest since February 14, after a weaker US dollar lifted it to a high of $1,876/mt. It closed lower on the day at $1,855.5/mt, with open interests down 4,251 lots to 663,000 lots. With resistance at the 20-day moving average, LME aluminium is likely to trade at $1,800-1,890/mt today. The SHFE 1905 contract tested pressure at the 40-day moving average as longs entered at a low of 13,460 yuan/mt. It is expected to trade at 13,350-13,800 yuan/mt today, with spot discounts at 50-10 yuan/mt.

Zinc: The US dollar moderated but remained at highs. While this will continue to pressure LME zinc, falling inventories of zinc across LME warehouses are expected to cap its downside room. LME zinc rebounded from a low of $2,720/mt, and ended higher at $2,750/mt. The SHFE 1905 contract followed a similar pattern as it closed at 21,465 yuan/mt after declined to a low of 21,310 yuan/mt. Expectations of recovering demand will see the contract testing pressure at the 10-day moving average today. It is likely to trade at 21,250-21,700 yuan/mt with LME zinc at $2,715-2,765/mt today.

Nickel: LME nickel failed to shrug off pressure at the 10-day moving average, and dropped to a low of $12,880/mt overnight. With support at the 20-day moving average, it closed at $12,915/mt, leading losses among base metals. LME nickel inventories continued to shrink 240 mt, to 194,046 mt. The SHFE 1905 contract was dragged by its LME counterpart to a low of 100,940 yuan/mt. It found support at the 101,000 yuan/mt level, closing at 101,230 yuan/mt, with open interests up 19,000 lots to 276,000 lots. Today, we expect the contract to trade at 101,000-103,000 yuan/mt, with LME nickel above the 20-day moving average, at $12,900-13,100/mt. Spot prices are seen at 101,500-103,500 yuan/mt.

Lead: The US dollar fell but failed to provide support to LME lead, which fell below support at the 20- and 40-day moving averages, to a low of $2,060/mt. The SHFE 1904 contract came off from a high of 17,490 yuan/mt, and ended lower on the day at 17,430 yuan/mt. It is likely to trade with support below at 17,000 yuan/mt today.

Tin: Resistance at the 20-day moving average saw LME tin testing support at $21,000/mt below. It closed at $21,010/mt after fell to a low of $20,945/mt. The SHFE 1905 contract ended below all moving averages as longs left near closing. It will trade with pressure at 148,000 yuan/mt today, with LME tin testing support at $21,000/mt.

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