SMM Morning Comments (Mar 27)

SHANGHAI, Mar 27 (SMM) – 

Copper: A rebound in prices of crude oil kept LME copper and the most-traded SHFE May contract above the Bollinger lower band overnight. LME copper ended at $6,351.5/mt, after it rallied from lows of $6,321/mt. The SHFE 1905 contract hovered around 48,290 yuan/mt after it traded within 48,230-48,470 yuan/mt. It dropped to a low of 48,270 yuan/mt before it closed at 48,310 yuan/mt. Today, we expect the contract to trade at 48,200-48,700 yuan/mt with LME copper at $6,320-6,370/mt. Spot sellers are likely to continue to lower premiums of high-quality copper to attract buyers. Spot premiums are seen at 950-1,050 yuan/mt today.

Aluminium: LME aluminium dropped to a low of $1,874.5/mt after miner Rio Tinto said they had begun to restart bauxite mining in Australia following the cyclone. LME aluminium regained some losses and closed at $1,904.5/mt, with the K-indicator facing pressure from the five-day moving average. The SHFE 1905 contract unsuccessfully tested pressure from 13,645 yuan/mt after longs lifted it above the five- and 10-day moving averages. It is likely to trade at 13,500-13,800 yuan/mt today, with its LME counterpart at $1,850-1,930/mt. Spot premiums are seen at 290-320 yuan/mt. 

Zinc: Concerns about lower crude oil supply from Russia buoyed oil prices overnight, and this bolstered LME zinc to a high of $2,882/mt, ending it 1.37% higher at $2,878.5/mt. Shrinking inventories across LME warehouses also lifted zinc prices. It is likely to consolidate at highs of $2,850-2,895/mt today. The SHFE 1905 contract shrugged off pressure from the Bollinger upper band, and notched a high of the year, above $22,400/mt. As lower social inventories of zinc indicated stable recovery of demand, the contract is likely to trade at highs of 22,100-22,600 yuan/mt today. 

Nickel: LME nickel found support from the 40-day moving average, before a higher US dollar depressed it to a low of $12,845/mt. Robust prices of oil bolstered it to a high of $13,155/mt, and ended it 1.16% higher overnight at $13,105/mt. The SHFE 1905 contract also grew over 1.8% and closed at 101,350 yuan/mt, with support from the five-day moving average. Today, the contact is likely to trade at 100,000-102,000 yuan/mt with LME nickel at $12,950-13,150/mt. Spot prices are likely at 103,000-104,500 yuan/mt. 

Lead: Higher LME inventories and pressure from fundamentals lowered LME lead below the $2,000/mt level, and settled it at a low of $1,997/mt. The SHFE 1905 contract outperformed its LME counterpart as it climbed to a high of 16,865 yuan/mt after base metals strengthened overnight. Fundamentals will cap its upward room today. 

Tin: LME tin traded around the five- and 20-day moving averages overnight. It recovered some losses as it climbed from a low of $21,285/mt and settled at $21,390/mt. LME tin inventories continued to shrink by 75 mt, to 1,045 mt, and this may support prices above $21,100/mt today. Resistance is seen at $21,600/mt. The SHFE 1905 contract dropped after it rose to the highest overnight at 147,290 yuan/mt. It ended below all moving averages at 146,680 yuan/mt. We see it facing resistance from the five- and 10-day moving averages, with support from 146,000 yuan/mt today.