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SMM Morning Comments (Aug 21)
Aug 21,2019 09:38CST
price review forecast
LME and SHFE base metals closed lower for the most part despite a weakened US dollar

SHANGHAI, Aug 21 (SMM) –  

Copper: Risk aversion sentiment on pessimistic outlook for global demand kept copper prices from rising overnight. Despite moderation, the US dollar index remained at highs above 98 and weighed on base metals. A lack of substantial progress on resolving the US-China trade conflict also kept copper prices lower. Three-month LME copper tested the $5,700/mt level as it fell to a low of $5,708/mt, with the most-liquid SHFE contract touching its lowest overnight at 46,260 yuan/mt. Short positions in all SHFE copper contracts grew 7,176 lots. Today, the most-active October contract is expected to trade between 46,200-46,600 yuan/mt, with LME copper at $5,700-5,750/mt. Demand from long-term contract trades may drive up spot premiums to 60-100 yuan/mt. 

Aluminium: Both Three-month LME aluminium and the most-traded SHFE October contract came off after climbed and ended 0.5% and 0.4% lower, respectively, last night. Limited upside, downside room is expected in the contract, which is seen trading between 14,300-14,400 yuan/mt today, with its LME counterpart at $1,700-1,800/mt today. 

Zinc: Weak support from fundamentals and pressure from the five-day moving average extended losses in three-month LME zinc, which slipped to a low of $2,228/mt and finished 0.98% lower on the day at $2,234/mt. The most-liquid SHFE October contract tracked declines in LME zinc and ended down 0.75% on the day at 18,470 yuan/mt, after it fell to a low of 18,415 yuan/mt. The KDJ indicators moved downwards, indicating further downside risks in prices. Today, the contract is expected to trade between 18,200-18,700 yuan/mt with LME zinc at $2,210-2,260/mt. 

Nickel: Three-month LME nickel pulled back from a high of $16,100/mt and lost all the previous gains from overnight, closing down 0.9% at $15,805/mt. Support below from the $15,500/mt level should be monitored today. The most-active SHFE October contract retreated after departing shorts pulled it to highs around 126,000 yuan/mt. A buildup of short positions drove it to a low of 122,300 yuan/mt, before it ended 0.6% lower on the day at 123,460 yuan/mt. Limited downside room is expected as longs remained in the market. 

Lead: Three-month LME lead underperformed its SHFE counterpart but stayed at highs, closing 0.34% higher on the day at $2,061.5/mt. The most-active SHFE October contract climbed to its highest in four months, at 17,050 yuan/mt, and hovered robustly around the 17,000 yuan/mt level, ending up 0.89% at 17,000 yuan/mt. Support from longs will keep the contract robust today, with resistance above from 17,500 yuan/mt. 

Tin: Three-month LME tin rose to a high of $16,580/mt as LME tin inventories continued to shrink 140 mt to 6,175 mt. It ended the trading day 0.6% higher at $16,470/mt, with the most-traded SHFE 2001 contract settling up 0.6% at 130,800 yuan/mt. The contract is likely to trade with support from 130,000 yuan/mt today, and LME tin is seen trading with support from $16,000/mt and resistance from $16,700/mt. 

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