SMM Morning Comments (Mar 14)

SHANGHAI, Mar 14 (SMM) –

Copper: Record high crude oil prices bolstered market sentiment, and lifted LME copper to a high of $6,487.5/mt during the European trading session. It hovered around the daily moving average, and closed at $6,466/mt, with open interests up 2,482 lots to 300,000 lots. The SHFE 1905 contract underperformed its LME counterpart, as it unsuccessfully tested pressure from the daily moving average and dipped to a low of 49,250 yuan/mt, before it closed at 49,300 yuan/mt. Resistance at the 10-day moving average is likely to keep it at 49,000-49,600 yuan/mt today with LME copper at $6,430-6,500/mt. Expanded backwardation in SHFE copper contracts is likely to weigh on spot offers, which are expected at a discount of 100 yuan/mt to flat today. 

Aluminium: LME aluminium jumped above all moving averages and broke pressure from $1,900/mt, after Norway’s Norsk Hydro said that production at its Neuss plant in Germany would likely to fall due to an accident. A lower US dollar also pulled the prices. LME aluminium ended within the Bollinger upper band at $1,903.5/mt. It is likely to trade robustly at $1,850-1,930/mt today. The SHFE 1905 contract received support from its LME counterpart, and climbed to a high of 13,690 yuan/mt, before it closed at 13,680 yuan/mt. It may trade at 13,500-13,800 yuan/mt, with spot discounts at 50-10 yuan/mt today. 

Zinc: Fundamentals continued to support LME zinc at around $2,835/mt overnight. It ended at $2,836/mt, and may consolidate at highs of $2,810-2,860/mt today. The SHFE 1905 contract tested pressure from the 22,000 yuan/mt level, but stopped rising at 22,025 yuan/mt, and closed at 21,940 yuan/mt. Amid domestic cautious investors, the contract is likely to trade at 21,700-22,100 yuan/mt today. 

Nickel: LME nickel regained losses from daytime, as it shrugged off resistance at $13,000/mt, and rose to a high of $13,230/mt after the US dollar weakened. Pressure from the 10-day moving average ended it at $13,120/mt. The SHFE 1905 contract also rallied to a high of 102,460 yuan/mt, after it hovered around the daily moving average, with support at 101,000 yuan/mt. It is expected to trade at 101,800-102,500 yuan/mt today, with LME nickel at $13,000-13,300/mt. Spot prices are set at 102,500-104,500 yuan/mt. 

Lead: While a softer US dollar lifted LME lead overnight, lead prices may continue to face heavy pressure above as limited downward room is seen in the greenback. LME lead jumped to a high of $2,131/mt, and ended at $2,126.5/mt. Fundamentals stemmed the increase in the SHFE 1904 contract at 17,580 yuan/mt, and settled it at 17,545 yuan/mt. It will trade with lingered resistance at the 10-day moving average today. 

Tin: LME tin extended its rangebound trend overnight, with support at 40-day moving average and resistance at the five-day moving average. It is likely to trade above the $21,000/mt level today. Support from the five-day moving average lifted the SHFE 1905 contract from a low of 146,910 yuan/mt, and settled it at 147,400 yuan/mt. The contract may face resistance at 148,500 yuan/mt today.