SMM Morning Comments (Aug 19)

SHANGHAI, Aug 19 (SMM) – 

Copper: A lower US dollar on disappointing data of the University of Michigan consumer sentiment index lifted copper prices, but negative fundamentals and global economic outlook will keep short-term prices under pressure. Three-month LME copper rose some 0.3% last Friday night and the most-liquid SHFE September contract finished 0.1% higher at 46,460 yuan/mt. Bearish signals from the KDJ indicators may keep the contract at lows of 46,300-46,550 yuan/mt today, with LME copper trading between $5,730-5,770/mt. Spot sellers may firm up offers to a premium of 30-70 yuan/mt given procurement on lower futures prices and deliveries for the long-term contract. 

Aluminium: The most-active SHFE October contract underperformed its LME counterpart as it lost 0.2% last Friday night and closed at 14,190 yuan/mt, with three-month LME aluminium gaining 0.6% to finish at $1,795.5/mt. This narrowed the SHFE/LME aluminium price ratio to 7.9. Today, the contract is seen hovering between 14,150-14,250 yuan/mt, with LME aluminum at $1,770-1,810/mt. Spot offers are likely at a discount of 30 yuan/mt to a premium of 10 yuan/mt. 

Zinc: Pressure from the five-day moving average weighed on three-month LME zinc to a low of $2,261.5/mt, before it ended slightly higher on the day at $2,267.5/mt. Investors remained cautious about lower LME zinc inventories amid a contango structure. Prices are expected to hover rangebound between $2,230-2,290/mt today. The most-active SHFE October contract faced pressure from the five-day moving average and closed lower for the second consecutive trading day, at 18,615 yuan/mt. Growing expectations of higher stocks on poor consumption will depress confidence in longs, but strong support will remain from the 18,000 yuan/mt level. Trading range of the contract is seen at 18,300-18,800 yuan/mt today. 

Nickel: Three-month LME nickel regained losses from earlier trades as it rebounded from a low of $16,010/mt, and closed 0.03% higher at $16,185/mt, with support from the $16,000/mt level. The most-active SHFE October contract consolidated above the daily moving average with a high of 126,720 yuan/mt, ending up 0.32% at 126,240 yuan/mt. Pressure from a previous high of 128,000 yuan/mt should be watched today. LME nickel is expected to test resistance from the Bollinger upper band, or the $16,400/mt level today. 

Lead: Three-month LME lead lost 1.21% last Friday night and finished at $2,034/mt, after it slid to a low of $2,032/mt as LME metals weakened for the most part during the European trading session. Support from the 20-day moving average remained. The most-liquid SHFE September contract outperformed its LME counterpart but still ended 0.27% lower on the day at 16,665 yuan/mt. The movement of longs should be closely monitored today. 

Tin: Three-month LME tin declined 2.2% last Friday night and closed at $16,605/mt, with a low of $16,570/mt, as stocks across LME-approved warehouses grew 1,580 mt to 6,335 mt. Support below is expected from $16,500/mt today. The most-active SHFE September contract traded rangebound after opened at 133,060 yuan/mt, ending down 1.1% at 132,380 yuan/mt. It is likely to trade with support from 132,000 yuan/mt and resistance from the 20-day moving average, or 134,000 yuan/mt today.