SMM Morning Comments (Mar 13)

SHANGHAI, Mar 13 (SMM) – 

Copper: A buildup of longs buoyed LME copper to a high of $6,519/mt last night, after it fell below the daily moving average to a low of $6,463/mt. As US oil prices increased for three consecutive days and the dollar dipped, the SHFE 1905 contract stood firmly above the five-day moving average with a high of 49,720 yuan/mt. Bullish signs around the KDJ indicators are likely to see the contract at 49,100-49,700 yuan/mt today. LME copper is expected to hover at $6,435-6,490/mt. Spot sellers may continue to firm offers up to a premium of 80 yuan/mt as the delivery day approaches. 

Aluminium: LME aluminium slid and returned to the five-day moving average after a lower US dollar lifted it to a high of $1,881.5/mt. It closed at $1,877.5/mt, with open interests up 2410 lots as longs entered. We expect it to test pressure at the 40-day moving average today, with trading range at $1,840-1,900/mt. As base metals rose across the board, the SHFE 1905 contract jumped above all moving averages, to a high of 13,595 yuan/mt, before it ended at 13,580 yuan/mt. It is likely to trade at 13,400-13,800 yuan/mt, with spot offers at a discount of 40 yuan/mt to flat against the SHFE front-month contract today. 

Zinc: LME zinc shrugged off pressure at $2,800/mt and jumped to a year-high of $2,843/mt, after the greenback fell and US inflation data came in weaker than expected. Ending at $2,842/mt overnight, it is expected to trade at $2,810-2,860/mt today. A robust LME zinc buoyed its SHFE counterpart, as the SHFE 1905 contract climbed above all moving averages and closed at 21,835 yuan/mt. However, domestic inventories remained at highs, and this may see the contract hovering at 21,550-22,000 yuan/mt today. 

Nickel: A lower US dollar index below 97 pulled LME nickel to a high of $13,260/mt. Pressure from the 10- and five-day moving averages ended it at $13,120/mt, with LME nickel inventories down 792 mt to 193,254 mt. The SHFE 1905 contract faced resistance at the 20-day moving average after it rose to a high of 103,460 yuan/mt. It is likely to trade at 101,800-102,300 yuan/mt, with LME nickel above the 20-day moving average, at $12,900-13,100/mt today. Spot prices are set at 103,000-104,000 yuan/mt today. 

Lead: LME lead stood firm above the 20-day moving average and rose to a high of $2,101.5/mt after the US dollar weakened. It ended at $2,086/mt and may face pressure above at the $2,100/mt level today. The SHFE 1904 contract slowed its decline with the highest level overnight at 17,535 yuan/mt. Resistance from the 10-day moving average settled it at 17,485 yuan/mt. We expect it to stabilise and trade rangebound today. 

Tin: With support at the 40-day moving average, LME tin rebounded from a low of $21,015/mt, and rose to the highest overnight at $21,410/mt, before it closed at $21,220/mt. Support below is set at $21,000/mt today. The SHFE 1905 contract traded robustly around the five- and 60-day moving averages, with a high of 147,920 yuan/mt. Today, it will trade with pressure at 149,000 yuan/mt.