SMM Morning Comments (Apr 1)

SHANGHAI, Apr 1 (SMM) –

Copper: Three-month LME copper climbed to a six-day high of $6,499.5/mt on Friday before it closed some 1.7% higher at $6,473.5/mt. The increase in LME copper drove shorts in Shanghai to cut positions, and sent the most traded SHFE May contract to open higher at 49,200 yuan/mt on Friday night, which traded rangebound to end the session at 49,140 yuan/mt. US-China trade optimism, higher US crude prices and a rebound in China factory activity are set to bolster copper prices. LME copper is expected to trade at $6,500-6,550/mt today with SHFE copper at 49,400-50,000 yuan/mt. Spot prices are seen at discounts of 30 yuan/mt to premiums of 120 yuan/mt as the lower value-added taxes take effect today.

Aluminium: Three-month LME aluminium came off from a six-day high of $1,925/mt to end the trading day 0.3% higher at $1,911/mt on Friday. It has risen for four consecutive days, but has yet to fully recover from losses since Thursday. US-China trade optimism and upbeat China manufacturing activity are likely to buoy LME aluminium today, which is expected to trade between $1,910-1,940/mt. Massive short-covering sent the most active SHFE May contract to open higher at 13,740 yuan/mt on Friday night, above all moving averages. It traded rangebound to finish the Friday night session at 13,755 yuan/mt. SHFE aluminium is expected to hang on above 13,700 yuan/mt today. Spot prices are expected to fall by over 200 yuan/mt today as the VAT cuts take effect, with discounts of 30 yuan/mt to premiums of 10 yuan/mt.

Zinc: Three-month LME zinc hit a nine-month high of $2,939/mt on Friday before it pared some earlier gains to end the trading day 1.6% higher at $2,913/mt. With optimistic fundamentals and positive developments on the macroeconomic front, LME zinc is expected to move at highs today, with a trading range of $2,900-2,950/mt after a higher open. The most active SHFE May contract refreshed this year’s high at 23,020 yuan/mt on Friday night, on reports that China will slash the banks' reserve requirements again at the start of April. The contract later lost most of those gains to end at 22,755 yuan/mt as investors took profits at highs. With a strong LME counterpart, SHFE zinc is expected to strengthen and trade at 22,600-23,100 yuan/mt today.

Nickel: Three-month LME nickel rose to a high of $13,170/mt on Friday before it erased some gains to end 0.9% higher at $12,995/mt. The most liquid SHFE May contract opened higher and climbed to a high of 101,650 yuan/mt on Friday night before it pared earlier gains to end close to 0.7% higher at 100,840 yuan/mt. LME nickel is expected to inch up today with a trading range of $12,950-13,150/mt. SHFE nickel is likely to trade between 100,000-102,000 yuan/mt. Spot prices are seen at 100,500-103,000 yuan/mt.

lead: Three-month LME lead came off from the week-high of $2,042/mt to finish the trading day marginally higher at $2,015/mt on Friday, suggesting limited upward momentum in LME lead. With bearish short- and medium-term moving averages, LME lead is likely to end its uptrend if the US dollar continues to climb. Earlier gains in LME lead bolstered its SHFE counterpart to a high of 16,910 yuan/mt on Friday night before the SHFE most traded May contract fell to end 0.57% higher at 16,835 yuan/mt. Short-covering primarily accounted for Friday night’s gains in SHFE lead, while limited buildup of long positions suggested little momentum.

Tin: Three-month LME tin dipped from earlier highs to end Friday lower at $21,400/mt. Low LME inventories are expected to continue to support the prices, with support at $21,300/mt and resistance at $21,600/mt. The most active SHFE May contract inched up to close at 148,150 yuan/mt on Friday night. Support is seen at 147,000 yuan/mt.