SMM Morning Comments (Sep 2)

SHANGHAI, Sep 2 (SMM) – 

Copper: Negative global economic outlook continued to weigh on copper prices, as the most-liquid SHFE contract fell below support from the Bollinger middle band and unsuccessfully tested pressure above before it ended down 0.49% last Friday night. The market awaited some sort of progress toward a trade resolution between China and the US in further talks this month, which may help to lift market sentiment. Today, the SHFE contract is seen trading between 46,450-46,700 yuan/mt with three-month LME copper at $5,640-5,680/mt. Spot premiums are likely at 60-90 yuan/mt as lower prices attract downstream purchases. 

Aluminium: Three-month LME aluminium regained losses after a higher US dollar drove it below all moving averages to a low of $1,736.5/mt. It closed higher for the second consecutive trading day, at $1,757/mt, up 0.17% on the day. The most-liquid SHFE October contract consolidated at highs but ended down 0.18% on the day at 14,225 yuan/mt. News about resumption of a domestic smelter and expectations of demand pick up in September kept sentiment mixed. Today, the contract is seen hovering between 14,180-14,300 yuan/mt with limited upside or downside room. LME aluminium is likely to trade between $1,740-1,780/mt today. 

Zinc: Three-month LME zinc ended lower for the third straight trading day as a stronger US dollar settled it down 1.57% at $2,220/mt. Lower LME inventories may help to stem the decline in prices and keep them between $2,210-2,260/mt today. The most-liquid SHFE October contract also fell 0.88% on the day to close at 18,580 yuan/mt, due to a weaker LME zinc and departing longs. Trading range today is seen at 18,300-18,800 yuan/mt. 

Nickel: Three-month LME nickel hit the highest since October 2014 at $18,135/mt, before ended up 9.11% at $17,905/mt, as advanced Indonesia export ban on nickel ore sparked fears about deficits. The most-liquid SHFE contract soared a maximum 6% after opening last Friday night, closing at an all-time high of 136,960 yuan/mt. Support from the Bollinger upper band should be monitored today. 

Lead: Loaded-up shorts depressed three-month LME lead, which lost 1.24% last Friday night to close at $2,028.5/mt. Support remained from the 40-day moving average. The most-active SHFE October contract moved lower with its LME counterpart after it hit a high of 17,375 yuan/mt. It finished the day 0.46% lower at 17,215 yuan/mt. As longs remained dominant, the contract may test support from 17,000 yuan/mt today. 

Tin: Three-month LME tin rallied with its SHFE counterpart, which surged to a high of 134,320 yuan/mt on rising longs and finished 2.97% higher at 133,140 yuan/mt. LME tin jumped to the highest last Friday night at $16,355/mt, before ending up 3% at $16,255/mt. LME tin inventories shrank 65 mt to stand at 6,995 mt. Today, LME tin may face resistance above from the 20-day moving average or $16,500/mt, and the SHFE 2001 contract will trade with pressure from 134,000 yuan/mt.