SMM Morning Comments (Mar 25)

SHANGHAI, Mar 25 (SMM) – 

Copper: Concerns about a global economic slowdown depressed base metals across the board, as LME copper slid to the lowest last Friday night at $6,300.5/mt and closed at $6,325/mt. It fell below the Bollinger middle band but continued to receive support from the 40-day moving average. Accumulated shorts pressured the SHFE 1905 contract and lowered the contract to a low of 48,310 yuan/mt near closing. Open interests across all copper contracts grew 16,956 lots to 622,000 lots. The first post-CNY decline in SHFE copper inventories on last Friday will limit downward room in prices today. The contract is likely to trade at 48,200-48,700 yuan/mt today with LME copper at $6,300-6,370/mt. Spot premiums are seen at 1,000-1,200 yuan/mt with lower futures prices attracting downstream purchases. 

Aluminium: As the US dollar jumped, LME aluminium dipped to a low of $1,880/mt and tested support from the 60-day moving average. It rebounded and settled at $1,902/mt. The SHFE 1905 contract slid to a low of 13,655 yuan/mt as investors cut their longs and added shorts. It is expected to trade at 13,500-13,800 yuan/mt with LME aluminium at $1,840-1,940/mt today. Spot premiums are set at 240-280 yuan/mt today. 

Zinc: Disappointing manufacturing data in the eurozone lifted the greenback, which weighed LME zinc below the 10-day moving average to a low of $2,806/mt. Fundamental support is likely to keep it around the five- and 10-day moving averages, or $2,800-2,850/mt today. The SHFE 1905 contract diverged from pressure above from the 22,000 yuan/mt level as longs exited. Despite a greater-than-expected loss in social inventories, the contract will continue to trade rangebound. Today, the contract is likely to hover at 21,600-22,000 yuan/mt.  

Nickel: A higher US dollar and resistance from the five-, 10-, and 20-day moving averages depressed LME nickel to week-low of $12,905/mt. It closed at $12,975/mt, with LME nickel inventories down 1,758 mt to 185,358 mt. The SHFE 1905 contract stemmed its decline at 99,900 yuan/mt, but pressure above from the daily moving average ended it at 100,010 yuan/mt. As shorts entered, open interests in the contract gained 21,000 lots to 267,000 lots. Today, it is expected to trade at 99,500-101,500 yuan/mt with LME nickel at $12,900-13,100/mt. Spot prices are set at 102,500-104,500 yuan/mt. 

Lead: LME lead continued to hover at lows after it declined from a high of $2,057/mt. It settled at $2,037/mt after dropped to the lowest last Friday night at $2,026/mt. The SHFE 1905 contract traded along the daily moving average and ended at 16,925 yuan/mt. Support from the five-day moving average will drive LME lead in the short run.  

Tin: Shrinking LME tin inventories close to 1,000 mt lifted prices to a high of $21,600/mt, but pressure from a higher US dollar dragged it to a low of $21,380/mt during the European trading session. The SHFE 1905 contract also declined after it rose, with support from the five- and 10-day moving averages, and resistance from the 60-day moving average. It may trade with pressure today with LME tin at highs.