SMM Morning Comments (Mar 26)

SHANGHAI, Mar 26 (SMM) – 

Copper: Eased concerns about slowier global growth kept copper prices stabilising at lows overnight. Longs entered after the US dollar dipped, and this pulled LME copper to a high of $6,342/mt near closing. It lost support from the 40-day moving average, with support from the Bollinger lower band. As shorts exited, the SHFE 1905 contract rebounded after it dropped to a low of 48,150 yuan/mt. It rose to a high of 48,380 yuan/mt and settled at 48,350 yuan/mt, with open interests down 6,058 lots to 611,000 lots. Today, it is likely to trade at 48,200-48,700 yuan/mt with LME copper at $6,300-6,350/mt. Spot premiums are seen at 950-1,150 yuan/mt. 

Aluminium: Given limited upward momentum, LME aluminium slid after it increased to the highest overnight at $1,899/mt. The SHFE 1905 contract traded weakly as shorts accumulated, with the K-indicator testing support at the 60-day moving average. It may trade at 13,400-13,700 yuan/mt today with its LME counterpart at $1,840-1,900/mt. Spot premiums are likely to occur at 270-310 yuan/mt. 

Zinc: LME zinc stemmed its decline at around $2,800/mt and rebounded above the five- and 10-day moving averages as risk aversion eased. It ended at $2,839.5/mt, and may trade at $2,800-2,850/mt with support from fundamentals. The SHFE 1905 contract outperformed its LME counterpart as it broke pressure from the 22,000 yuan/mt level and rose to a high of 22,090 yuan/mt. A lower SHFE/LME zinc price ratio sharply reduced imports of refined zinc in February. Today, the contract is likely to trade at 21,750-22,200 yuan/mt. 

Nickel: LME nickel shrugged off resistance from $12,900/mt after it unsuccessfully tested that level three times. Limited upward momentum lowered it from a high of $12,975/mt and ended it at $12,955/mt, with LME nickel inventories down 1,098 mt to 184,260. The SHFE 1905 contract faced pressure from 100,000 yuan/mt as it rose to a high of 99,990 yuan/mt. It closed at 99,820 yuan/mt, with open interests down some 10,000 lots as shorts exited. Today, we expect the contract to trade at 98,500-100,500 yuan/mt, with LME nickel at $12,800-13,000/mt. Spot prices are set at 103,000-105,000 yuan/mt. 

Lead: LME lead extended its decline as it dropped to a low of $2,011.5/mt and closed at $2,013/mt. It traded along the five-day moving average but diverged from moving averages above. We expect it to test support at $2,000/mt today. The SHFE 1905 contract fell slower than its LME counterpart as it slid from a high of 16,860 yuan/mt and ended at 16,815 yuan/mt. It is expected to stem its decline if base metals rebound today. 

Tin: LME tin regained losses from the European trading session as it rallied from a low of $21,225/mt, to the highest overnight at $21,435/mt. It traded around the five- and 20-day moving averages, underpinned by low inventories across LME warehouses. Today, it is likely to trade with support from $21,100/mt and resistance from $21,600/mt. The SHFE 1905 contract hovered below all moving averages and closed at 146,810 yuan/mt. We see it testing support at 146,000 yuan/mt today.