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SMM Morning Comments (Aug 16)

iconAug 16, 2019 09:30
Source:SMM
SHFE base metals, except for copper and tin, ticked up overnight

SHANGHAI, Aug 16 (SMM) –

Copper: As robust retail sales data bolstered the US dollar, both LME and SHFE copper continued their rangebound pattern at lows overnight. Three-month LME copper hovered around $5,760/mt, while the most active SHFE October contract was around 46,400 yuan/mt. Open interest for the SHFE copper complex shrank 7,638 lots to 621,000 lots. A global economic slowdown and trade uncertainty will continue to weigh on copper prices, while the latest Chinese property and auto data could not offer a relief. Copper prices are expected to continue to stay at lows today, with LME copper moving between $5,710-5,770/mt. SHFE copper is likely to trade at 46,300-46,600 yuan/mt, with spot premiums of 10-40 yuan/mt.

Aluminium: Three-month LME aluminium recovered from earlier losses to end the day a tad higher at $1,785/mt, and is expected to trade between $1,760-1,800/mt today. Aggressive builds of long positions bolstered the most traded SHFE October contract in early trade overnight, before the contract traded rangebound to close 0.14% higher at 14,240 yuan/mt. SHFE aluminium is expected to consolidate at highs, given firm long positioning. It is likely to move between 14,150-14,300 yuan/mt today, while spot prices are seen in a discount of 30 yuan/mt to a premium of 10 yuan/mt relative to the SHFE 1909 contract.  

Zinc: As the US dollar index rose, three-month LME zinc fell after climbing to a high of $2,307/mt on Thursday, ending the day 0.4% lower at $2,263.5/mt. China’s trade threat on Thursday dimmed the hopes for a US-China trade deal, and will hurt market sentiment, while fundamentals could not offer support, either, as the contango structure continues. Resistance is seen from the five- and 10-day moving averages which adhere to each other. All those factors point to limited steam in LME zinc, which is likely to trade between $2,240-2,300/mt today. The most active SHFE October contract followed its LME counterpart lower overnight, paring earlier gains to end 0.16% higher at 18,640 yuan/mt, as shorts loaded up positions. Trade pessimism and expectations for higher inventories will continue to sideline longs, while support is at 18,500 yuan/mt. SHFE zinc is expected to trade between 18,400-18,900 yuan/mt today.

Nickel: Three-month LME nickel extended its recent increase to a high of $16,385/mt on Thursday, before it erased some gains to end 1.79% higher at $16,180/mt. Resistance from a previous high around $16,700/mt will come under scrutiny today. The most traded SHFE October contract rose above the five-day moving average, towards the upper Bollinger band overnight, gaining 3.09% to end at 126,970 yuan/mt overnight. Pressure from a previous high around 128,000 yuan/mt is crucial to watch today.

Lead: With pressure from the five-day moving average, three-month LME lead eased after hitting a high of $2,066.5/mt, and closed the day 0.46% higher at $2,059/mt. LME lead remained rangebound, with strong support from the 20-day moving average. Upward momentum remains in LME lead, with the first hurdle at $2,100/mt. The most active SHFE September contract advanced 1.02% to end at 16,760 yuan/mt overnight, but trading volumes and open interest for the contract failed to sharply expand, which suggested the risks of a pull-back.

Tin: Three-month LME tin rebounded to a two-week high of $17,195/mt on Thursday, before it relinquished all those gains to end 0.64% lower at $16,985/mt. Support is seen at $16,500/mt. The most traded SHFE September contract came off from a high of 135,300 yuan/mt overnight, to close 0.19% lower at 133,510 yuan/mt. Support is seen at 132,000 yuan/mt.

Morning comments
Copper
Aluminium
Zinc
Lead
Nickel
Tin

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