SMM Morning Comments (Sep 4)

SHANGHAI, Sep 4 (SMM) – 

Copper: Bearish economic outlook and intensified risk aversion weighed on copper prices Tuesday, as three-month LME copper fell to a two-year low of $5,518/mt. The most-active SHFE October contract also slid to the weakest in two years at 45,730 yuan/mt. Disappointing US manufacturing data dimmed the demand outlook for industrial metals, and a high US dollar put added pressure on metals prices. The SHFE contract fell below all moving averages and lost support from the Bollinger bands. It is likely to trade between 45,900-46,300 yuan/mt today with LME copper at $5,580-5,630/mt. Lower futures prices will help support spot premiums at 80-110 yuan/mt. 

Aluminium: Three-month LME aluminium continued its weak trends as it slipped to a record low around $1,736.5/mt, before it regained some losses and finished lower on the day at $1,752/mt. With pressure from the five-day moving average, it is expected to hover between $1,730-1,780/mt today. The most-liquid SHFE October contract was propelled by longs, which added their positions on domestic falling inventories. It is seen trading at 14,250-14,400 yuan/mt today with spot premiums at 20-40 yuan/mt. 
 
Zinc: A lack of confidence in longs amid pessimistic outlook on global growth kept three-month LME zinc trading below the 10-day moving average, with a low of $2,200/mt. It finished at $2,210/mt, down 1.36% on the day. A backwardation structure in LME zinc may help prices to slow declines and trade between $2,200-2,250/mt today. The most-active SHFE October contract slumped below all moving averages as longs covered their positions. Firm spot premiums could underpin fundamentals and futures prices today. The contract may trade between 18,400-18,900 yuan/mt today.

Nickel: Three-month LME nickel pulled back a bit after it jumped to a high of $18,710/mt, but it found support from the Bollinger upper band, or $17,800/mt, before ending 0.33% lower on the day at $17,900/mt. It is expected to test support from $178,000/mt today. The most-liquid SHFE contract held firm above the Bollinger upper band and all moving averages, as it rebounded swiftly after dipped to a low of 143,740 yuan/mt, ending slightly higher on the day at 145,410 yuan/mt. Pressure from the 146,000 yuan/mt level should be monitored today. 

Lead: Three-month LME lead extended losses and closed lower for the fifth consecutive trading day after it climbed to highs around $2,039.5/mt with its SHFE counterpart. Pressure from a firm US dollar settled it 1.38% lower on the day at $1,995.5/mt, with the most-liquid SHFE contract losing 0.95% and finishing at 17,210 yuan/mt. Potential weak support from the 60-day moving average may keep LME lead between $1,900-1,950/mt, while the SHFE contract is expected to stem decline with a chance of rebound today. 

Tin: Prices of tin consolidated at highs as three-month LME tin rallied from a low of $16,370/mt and ended higher on the day at $16,720/mt. The most-liquid SHFE contract got support from the five- and 40- day moving averages, closing up at 135,800 yuan/mt. Pressure above from the previous high of 138,800 yuan/mt should be monitored today, with LME tin trading with resistance from $17,100/mt.