SMM Morning Comments (Apr 19)

SHANGHAI, Apr 19 (SMM) –

Copper: Downbeat manufacturing data from the Eurozone and Germany weighed on the euro and copper prices on Thursday. Three-month LME copper fell to a low of $6,426.5/mt before it reversed some losses to end 1.3% lower at $6,464.5/mt. The most active SHFE June contract opened lower and traded in a narrow range to end overnight 0.84% lower at 49,320 yuan/mt. SHFE copper is unlikely to see strong performance today, without the direction from its LME counterpart or clues from economic data. Pressure lies at the five- and 10-day moving averages. SHFE copper is expected to trade between 49,200-49,600 yuan/mt with spot premiums at 20-130 yuan/mt. Lower prices of futures and the upcoming weekend might improve spot purchases today.  

Aluminium: Despite the rebound in the greenback, three-month LME aluminium rallied from earlier lows to close 0.84% higher at $1,868/mt on Thursday, recovering from much of the losses in the previous day, as its SHFE counterpart rose. Weak fundamentals will likely keep gains in LME aluminium in check. It is expected to trade rangebound in the short term. The most traded SHFE June contract traded in a narrow range to end marginally higher at 14,060 yuan/mt overnight. News of capacity shutdown prompted longs in Shanghai to aggressively load up positions for three consecutive days. This performance is unlikely to sustain after the market prices in the news. SHFE aluminium is expected to trade between 14,000-14,100 yuan/mt today with spot discounts of up to 40 yuan/mt.

Zinc: Anticipation of more deliveries to LME warehouses and a stronger US dollar weighed three-month LME zinc to a nearly six-week low of $2,751/mt, below the 60-day moving average, on Thursday, before it closed the trading day 0.57% lower at $2,794.5/mt. LME zinc inventories extended their gains on the day, with an increase of over 7,000 m, which further grew bearish sentiment across the market. The most active SHFE June contract fell to lows of 21,420 yuan/mt, the lowest in almost four weeks, before it recovered some losses to end at 21,640 yuan/mt. Despite the anticipated supply growth, SHFE zinc remained above the 60-day moving average as lower prices spur consumption. SHFE zinc is expected to consolidate today with most transactions at 21,300-21,800 yuan/mt.

Nickel: Bleak Eurozone data and robust US dollar dragged three-month LME nickel to a two-month low of $12,625/mt on Thursday, before it closed the trading day 1.75% lower at $12,660/mt. The most traded SHFE June contract traded rangebound to end 1.28% lower at 99,050 yuan/mt overnight. It is expected to fall to 98,000-100,000 yuan/mt today. Spot prices are seen at 99,000-102,000 yuan/mt.

Lead: Three-month LME lead recovered from earlier losses to close 0.2% higher at $1,943/mt on Thursday. LME lead has stabilised and is expected to remain rangebound in the short run. The most traded SHFE June contract rebounded from earlier lows to close 0.4% higher at 16,490 yuan/mt overnight. Signs of long buying offer support to SHFE lead at lows.

Tin: As the dollar rose sharply, three-month LME tin extended its declines to $20,215/mt, its lowest in more than three months, before it regained some ground to end 0.7% lower at $20,240/mt on Thursday. The most active SHFE September contract tumbled to a over three-month low of 147,430 yuan/mt overnight before it closed at 147,670 yuan/mt. The buildup of short position and a decline in LME tin weighed on SHFE tin overnight.