SMM Morning Comments (Apr 18)

SHANGHAI, Apr 18 (SMM) –

Copper: Upbeat Chinese economic data boosted three-month LME copper to a 10-month high of $6,608.5/mt on Wednesday before LME copper pared some gains to close 0.89% higher at $6,549.5/mt. As longs aggressively to build position, the most active SHFE June contract climbed to a nearly seven-week high of 50,080 yuan/mt overnight before it pared some gains to end 0.28% higher at 49,680 yuan/mt. Germany will release manufacturing data this afternoon, which is expected to remain weak and hamper copper prices. LME copper is expected to trade between $6,510-6,560/mt today with SHFE copper at 49,450-49,800 yuan/mt. Spot premiums are seen firm at 30-130 yuan/mt, as smelter maintenance tightens supply.

Aluminium: Three-month LME aluminium came off from a week-high of $1,872.5/mt to end marginally lower at $1,852.5/mt on Wednesday. LME aluminium has been slowly falling since April. With limited support from fundamentals, LME aluminium is expected to trade between $1,840-1,880/mt today. Bolstered by stronger-than-expected Chinese economic growth, the most traded SHFE June contract climbed to 14,060 yuan/mt, a high of this year, before it ended 0.5% higher at 14,030 yuan/mt overnight. The shutdown of more than 500,000 mt/year capacity of Shandong Weiqiao for a capacity swap also supported the market. SHFE alumimium is expected to trade between 13,950-14,100 yuan/mt today with spot discounts of up to 40 yuan/mt.

Zinc: An unexpected decline in LME zinc inventories bolstered three-month LME zinc to a high of $2,839/mt on Wednesday before cautious sentiment forced it to relinquish much of those gains to end marginally higher at $2,810.5/mt. LME zinc is expected to remain below the 40-day moving average and trade at $2,790-2,840/mt today as concerns about more deliveries to LME warehouses linger. The most active SHFE June contract reversed initial gains to close 0.89% lower at 21,630 yuan/mt overnight. Traders remained keen to add positions in forward contracts, and this widened contract spreads. Growing anticipation of supply growth deters traders from going long. SHFE zinc is expected to trade between the 40- and 60-day moving averages with most transactions at 21,500-21,900 yuan/mt.

Nickel: Three-month LME nickel fell to a three-week low of $12,850/mt on Wednesday before it recovered some losses to close 0.35% lower at $12,885/mt. As shorts aggressively loaded up positions, the most traded SHFE June contract dropped to a low of 99,750 yuan/mt before it ended some 1.2% lower at 100,700 yuan/mt overnight. LME nickel is expected to dip today and trade between $12,800-13,000/mt. SHFE nickel is expected to trade at 99,000-101,000 yuan/mt. Spot prices are seen at 100,000-102,500 yuan/mt.

Lead: Three-month LME lead climbed to highs of $1,948/mt on Wednesday before it pared some gains to end 0.62% higher at $1,939/mt. Inclination of selling at highs kept LME lead rangebound at lows. Support lies at the $1,900/mt level, where LME lead hovered for half of 2018. LME lead is expected to trade at $1,925-1,955/mt today. The most active SHFE June contract lost its initial gains and fell 0.46% to close at 16,390 yuan/mt overnight. SHFE lead is expected to hover at lows in the short term and trade between 16,350-16,450 yuan/mt today. Spot prices in Shanghai are seen at 16,450-16,550 yuan/mt.

Tin: Three-month LME tin fell to $20,360/mt, the lowest in almost three months, before it ended 0.6% lower at $20,385/mt on Wednesday. A gain in LME tin inventories weighed on LME tin. Resistance is seen at $20,100/mt. The most liquid SHFE September contract rebounded from earlier lows to close slightly higher at 148,710 yuan/mt overnight, still standing below all moving averages. Support is seen at 148,000 yuan/mt with resistance at 150,000 yuan/mt.