SMM Morning Comments (Apr 25)

SHANGHAI, Apr 25 (SMM) –

Copper: Three-month LME copper rebounded to close 0.43% higher at $6,441.5/mt on Wednesday. The most active SHFE June contract opened higher and extended its gains to close at 49,240 yuan/mt overnight, up 0.53% as gains in its LME counterpart prompted Shanghai shorts to cover position. Gains in copper prices were capped by a jump in the US dollar. China central bank injected funds into the market via targeted loans on Wednesday, which improved market sentiment and will likely support copper prices today even with limited upside room in copper prices. LME copper is expected to trade between $6,420-6,465/mt today with SHFE copper at 49,000-49,400 yuan/mt. Spot prices are seen at a discount of 40 yuan/mt to a premium of 60 yuan/mt. Higher prices of futures are likely to erode buying interest across the spot market and prompt sellers to continue to slash offers.

Aluminium: Three-month LME aluminium hovered in a wide range and ended 0.24% lower at $1,871.5/mt on Wednesday. LME aluminium remained above the five- and 10-day moving averages, with its KDJ lines continuing to expand upwards. With a robust SHFE counterpart, LME aluminium is expected to rise to a range of $1,860-1,890/mt today. As longs aggressively loaded up their position, the most traded SHFE June contract extended its recent gains to end at 14,240 yuan/mt overnight, up 0.6% over the session. Despite a sharp increase in the greenback, SHFE aluminium rose overnight. It is expected to trade between 14,150-14,250 yuan/mt today with spot discount of up to 30 yuan/mt.

Zinc: A decline in LME zinc inventories helped stem recent declines in LME zinc prices. Three-month LME zinc fluctuated to close flat at $2,749/mt on Wednesday. LME zinc is unlikely to fall sharply today, and will likely trade around the lower Bollinger band with a trading range of $2,730-2,780/mt. The most active SHFE June contract fluctuated to close overnight session 0.16% lower at 21,385 yuan/mt. Its KDJ lines stopped expanding downwards. SHFE zinc is unlikely to decline significantly today, and will likely trade under pressure from the five-day moving average with most transactions at 21,250-21,650 yuan/mt.

Nickel: Three-month LME nickel fluctuated to end 0.12% higher at $12,425/mt on Wednesday. The most traded SHFE June contract also closed overnight some 0.1% higher at 97,740 yuan/mt. LME nickel is expected to remain rangebound in a region of $12,350-12,550/mt today. SHFE nickel is likely to trade between 96,500-98,500 yuan/mt. Spot prices are seen at 97,500-100,500 yuan/mt.

Lead: Three-month LME lead climbed to a high of $1,938/mt before a stronger US dollar forced it to give up those gains to close the trading day marginally lower at $1,924.5/mt on Wednesday. LME lead remained rangebound at lows, as moving averages showed bearish signs. It is expected to trade between $1,915-1,945/mt today. The most active SHFE June contract rose 0.61% to close at 16,510 yuan/mt overnight. The unwinding of short positions primarily accounted for overnight gains in SHFE lead. SHFE lead is expected to trade at 16,450-16,550 yuan/mt today.

Tin: Dragged by a strong US dollar, three-month LME tin dropped to a low of $19,575/mt on Wednesday before it pared some losses to end 0.73% lower at $19,700/mt. Support is seen at $19,500/mt while resistance is at $20,100/mt. The most liquid SHFE September contract edged down to close at 147,460 yuan/mt overnight. Resistance is seen at 148,500 yuan/mt.