SMM Morning Comments (Aug 23)

SHANGHAI, Aug 23 (SMM) –  

Copper: Disappointing manufacturing data from the US and Germany exacerbated concerns about the global economic slowdown and weighed on copper prices overnight. Three-month LME copper fell below support from $5,700/mt, to a low of $5,671/mt, before it pared some losses and closed down 0.6% on the day. The most-active SHFE October contract failed to hold above 46,200 yuan/mt and fell to an intraday low of 46,160 yuan/mt, ending 0.3% lower on the day. Loaded-up shorts accounted for the decline. A lack of technical support may keep the contract at 46,100-46,450 yuan/mt, with LME copper at $5,680-5,720/mt today. Spot premiums are likely to firm up to 70-100 yuan/mt as lower prices attract downstream purchases. 

Aluminium: Three-month LME aluminium extended its declines overnight and fell to a low of $1,774.5/mt, closing down 0.7% on the day at $1,778.5/mt. As shorts added their positions and longs exited, the most-liquid SHFE October contract fell sharply after opened at 14,355 yuan/mt, to lows around 14,270 yuan/mt and ended the trading day 0.56% lower at 14,260 yuan/mt. Signs of domestic supply recovery is likely to keep the contract between 14,200-14,300 yuan/mt, with its LME counterpart at $1,700-1,800/mt today. 

Zinc: Three-month LME zinc lost 2.06% overnight and closed at $2,238/mt after it unsuccessfully tested pressure from the daily moving average and dropped to a low of $2,233/mt. The most-active SHFE October contract faced pressure from loaded-up shorts and the 10-day moving average, ending down 0.86% on the day at 18,460 yuan/mt. However, an absence of significant buildup in social inventories may stem the decline in prices. The contract may hover between 18,200-18,700 yuan/mt today, with LME zinc between $2,220-2,270/mt. 

Nickel: Three-month LME nickel regained part of the losses as it rallied from a low of $15,530/mt and shrugged off pressure from the 10-day moving average, settling down 0.9% on the day at $15,630/mt. With resistance from the five- and 10- day moving averages, the most-liquid SHFE October contract consolidated around 123,400 yuan/mt and ended nearly flat at 123,240 yuan/mt. Long positions remained in the market and supported prices. Today, fund movement should be closely watched. 

Lead: Three-month LME lead retreated from a high of $2,085/mt during the European trading session as base metals mostly weakened. It finished the trading day 0.48% lower at $2,065.5/mt, but still on track to climb on the week. The most-liquid SHFE October contract came off from highs but received support from the five-day moving average, ending down 0.41% on the day at 17,015 yuan/mt. Movement in long positions should be monitored today. 

Tin: Three-month LME tin rebounded after fell below support from $16,000/mt, closing down 0.3% on the day at $16,150/mt. The most-liquid SHFE 2001 contract traded within a broad range around the daily moving average, or 130,600 yuan/mt. It remained below all moving averages and settled down 0.3% at 130,500 yuan/mt. Support below is seen from 130,000 yuan/mt, with support for LME tin at $16,000/mt, or $15,500/mt.