SHANGHAI, Mar 20 (SMM) –
Copper: A unexpected drop in US crude oil inventories pulled up base metals overnight. As shorts exited after the US dollar weakened, LME copper increased to a high of $6,503/mt. It ended at $6,459/mt, with open interests down 7,059 lots to 292,000 lots. The SHFE 1905 contract tested pressure from 49,500 yuan/mt, but lingered shorts lowered it to 49,230 yuan/mt, before it ended at 49,320 yuan/mt. Today, we expect the contract to trade at 49,100-49,700 yuan/mt, with LME copper at $6,430-6,500/mt. Spot premiums are likely to hold firm at 800-1,150 yuan/mt, but trades will slow from yesterday.
Aluminium: LME aluminium climbed to $1,944/mt after it was reported that Norsk Hydro’s aluminium smelters were hit by a cyber attack. This was before it jumped to a three-month high of $1,946/mt, and ended at $1,940/mt. The SHFE 1905 contract rallied from a low of 13,695 yuan/mt, to around the five-day moving average. It closed at 13,760 yuan/mt, after it rose to a high of 13,790 yuan/mt. It is likely to consolidate at highs today, at 13,650-13,900 yuan/mt, with its LME counterpart at $1,850-1,950/mt. Spot premiums are set at 180-220 yuan/mt today.
Zinc: Fundamentals bolstered LME zinc to shrug off pressure from the five-day moving average, to a high of $2,815/mt. A weaker US dollar also lifted prices. A robust LME zinc supported its SHFE counterpart, as the SHFE 1905 contract climbed and ended higher overnight at 21,745 yuan/mt. Expectations of a lower VAT buoyed spot premiums, and this is likely to deter downstream purchases. Today, the 1905 contract is expected to trade at 21,600-22,000 yuan/mt, with LME zinc at $2,785-2,835/mt.
Nickel: Higher prices of crude oil and a lower US dollar pulled up LME nickel above pressure from $13,200/mt, to a high of $13,290/mt. It closed around the 10-day moving average, at $13,155/mt, with LME nickel inventories dipping 414 mt to 190,434 mt. The SHFE 1905 contract stemmed decline at the 10-day moving average and rebounded to a high of 102,980 yuan/mt. Pressure from 103,000 yuan/mt ended it at 102,740 yuan/mt. Open interests increased by 12,000 lots, with longs accounted for the most. The contract is likely to trade at 102,000-103,500 yuan/mt today, with LME nickel at $13,100-13,300/mt. Spot prices are seen at 104,000-105,500 yuan/mt.
Lead: LME lead hovered around the daily moving average last night, as it rebounded after dipped to a low of $2,027.5/mt. The SHFE 1905 contract followed a similar pattern as it closed at 16,865 yuan/mt, after unsuccessfully tested the 16,875 yuan/mt level above. The five- and 10-day moving averages moved downwards. Pressure from shorts may limit its upward room today, and this is likely to keep LME lead below the 60-day moving average today.
Tin: Low inventories on export restrictions of Indonesia’s tin, and a weaker US dollar buoyed LME tin to the highest overnight at $21,350/mt. It stood above the 10-day moving average and settled at $21,305/mt. The SHFE 1905 contract also moved above the 10-day moving average, and ended at 147,330 yuan/mt after it jumped to a high of 147,500 yuan/mt. Firm spot offers are likely to limit transactions and lower upward momentum in the contract today, while low inventories will underpin LME tin in the near term.