SMM Morning Comments (Mar 15)

SHANGHAI, Mar 15 (SMM) –

Copper: LME copper dropped to a low of $6,370.5/mt and failed to break pressure from the daily moving average after the industrial output in top metals consumer China fell to a 17-year low. An accumulation of over 30,000 mt in LME copper stocks will continue to weigh on prices today. The SHFE 1905 contract lost support from the five-day moving average and the Bollinger middle band as shorts entered. A robust US dollar is likely to keep it at 48,650-49,000 yuan/mt today with LME copper at $6,365-6,425/mt. Spot offers are set at a discount of 150 yuan/mt to flat over the SHFE front-month contract on the delivery day today. 

Aluminium: A rebound in the US dollar weighed LME aluminium to the lowest overnight at $1,893/mt, before it returned to around the five-, 10-, and 20- day moving averages. It ended at $1,902/mt, and may trade at $1,850-1,930/mt today. The SHFE 1905 contract dropped to a low of 13,565 yuan/mt as China’s economic data came in weaker than expected. It is expected to trade at 13,500-13,800 yuan/mt today with spot discounts down to 40 yuan/mt.

Zinc: LME zinc tested support at the five-day moving average as a stronger US dollar dragged it to a low of $2,803.5/mt, after fundamentals drove it to a high of $2,850/mt overnight. As LME zinc inventories continued to shrink, prices may hover at $2,800-2,850/mt today with support from the five-day moving average. The SHFE 1905 contract is unlikely to break pressure above as consumption remained moderate. It is likely to trade at 21,600-22,100 yuan/mt today. 

Nickel: LME nickel fell below support at the 20-day moving average, to a low of $12,815/mt as the US dollar strengthened to a high of 96.82. LME inventories shrank 138 mt to 193,116 mt. It is likely to trade at $12,900-13,100/mt with the SHFE 1905 contract at 100,000-102,000 yuan/mt today. Spot prices are set at 101,000-103,000 yuan/mt. 

Lead: LME lead declined to around the 10-day moving average as the US dollar rebounded and its SHFE counterpart weakened. The SHFE 1904 contract remained in a downward trend as it ended at 17,365 yuan/mt after it traded rangebound at 17,375 yuan/mt. Further downward room is expected today. 

Tin: LME tin extended its rangebound trend as it rallied above the daily moving average after dipped to a low of $21,100/mt. Support is expected at $21,000/mt today. The SHFE 1905 contract dropped with resistance at the 60-day moving average. With support from the five-day moving average, it ended at 147,100 yuan/mt. It will trade with continued pressure at 148,500 yuan/mt today.