SMM Morning Comments (Apr 2)

SHANGHAI, Apr 2 (SMM) –           

Copper: As longs took profits, three-month LME copper came off from earlier highs to finish the trading day 0.2% lower at $6,461/mt. Impacted by the London market, longs in Shanghai cut their positions overnight. This prompted the most traded SHFE May contract to lose all the gains from the previous day to a low of 49,040 yuan/mt before it closed the overnight session 0.3% lower at 49,130 yuan/mt. Continued gains in US crude oil prices might offer some support to copper prices, with a strong US dollar. LME copper is expected to trade at $6,435-6,490/mt today with its SHFE counterpart at 49,000-49,500 yuan/mt. Overnight losses in prices of futures might boost trades in the physical market today. Spot prices are seen between discounts of 20 yuan/mt to premiums of 80 yuan/mt.

Aluminium: US-China trade progress and stronger-than-expected China factory activity buoyed the three-month LME aluminium to a seven-day high of $1,931/mt on Monday. The contract pared all those gains to finish the trading day close to 1% lower at $1,892/mt as the US dollar index rose. Rusal has fully resumed aluminium supplies to the US. This, together with overall strength in the greenback, is expected to weigh on LME aluminium to trade at $1,890-1,910/mt today. The most active SHFE May contract opened lower and fell overnight, closing 0.3% lower at 13,765 yuan/mt. It is expected to trade at 13,770-13,870 yuan/mt today with spot prices at discounts of 20 yuan/mt to premiums of 20 yuan/mt.

Zinc: Three-month LME zinc opened higher and rose to a new high of $2,958/mt on Monday before it lost all those gains due to a stronger dollar. LME zinc lost 0.6% on the day to end at $2,896/mt. Shrinking LME inventories slowed declines in prices. LME zinc is expected to test support at the five-day moving average today with a trading range of $2,880-2,930/mt. As longs cut their positions, the most traded SHFE May contract lost 0.6% overnight to end at 22,770 yuan/mt. Limited declines in social inventories of refined zinc across Shanghai, Guangdong and Tianjin failed to pull SHFE zinc out of its current range. The contract is expected to consolidate at 22,600-23,100 yuan/mt today.

Nickel: US-China trade optimism bolstered the three-month LME nickel to a week-high of $13,335/mt on Monday before it pared some gains to end the trading day 0.9% higher at $13,115/mt. The most active SHFE May contract pared most of earlier gains to end at 101,800 yuan/mt overnight. LME nickel is expected to hover between $13,000-13,200/mt today with its SHFE counterpart at 101,000-102,500 yuan/mt. Spot prices are seen at 101,500-103,000 yuan/mt.

Lead: Gains in SHFE lead bolstered the three-month LME lead to an intraday high of $2,038.5/mt before a stronger US dollar weighed it to close the trading day 0.2% lower at $2,011/mt. A weaker LME lead weighed on the most traded SHFE May contract overnight, which lost 0.3% to close at 16,825 yuan/mt. This drove SHFE lead to relinquish Monday’s gains and grew the risks of further declines. Support is seen at 16,700 yuan/mt.

Tin: Three-month LME tin nudged up close to 0.1% to end Monday at $21,420/mt. LME tin inventories fell to a record low of 950 mt on Monday. This is expected to support LME tin at highs in the short run, with resistance at $21,600/mt. The most liquid SHFE May contract traded rangebound around the daily moving average as high as 148,300 yuan/mt overnight, closing at 148,300 yuan/mt. Resistance is seen at 148,700 yuan/mt.