SMM Morning Comments (Sep 16)

SHANGHAI, Sep 16 (SMM) –

The SHFE closed from Thursday night for the Mid-Autumn Festival Holiday, and will resume trading today.

Copper: Three-month LME copper hit the highest in 1-1/2 months, at $5,980/mt, on Friday, on signs of an easing of US-China trade tensions and after the ECB delivered a package of stimulus measures. Better-than-expected US retail sales pointed to solid consumer spending that should continue to support the world’s largest economy. CMX gold fell for two consecutive weeks, suggesting improving risk appetite that will offer support to copper prices. Oil prices surged following drone attacks over the weekend that hit major oil production facilities in Saudi Arabia, and this is expected to buoy copper prices. In China, consumption is recovering, with a decline of 9,871 mt in copper stocks across SHFE-approved warehouses last week and a rebound in operating rates across downstream consumers. This will be supportive of SHFE copper. LME copper is expected to trade between $5,940-6,000/mt today, with SHFE copper at 47,400-48,000 yuan/mt. Spot premiums are seen firm at 110-140 yuan/mt on the last trading day of the 1909 contract.

Aluminium: As the US dollar weakened, three-month LME aluminium rallied on Friday, gaining 1.09% to end at $1,813/mt. It is expected to trade between $1,780-1,830/mt today. SHFE aluminium is likely to move between 14,300-14,500 yuan/mt. SMM data showed that social inventories of primary aluminium in China have fallen for five weeks. Improving consumption in a high season in September-October and expectations of greater supply pressure in November widened the backwardation on SHFE aluminium.

Zinc: Dollar weakness bolstered three-month LME zinc above several moving averages to a six-week high of $2,395/mt on Friday, before the contract ended the day 2.03% higher at $2,390/mt. LME zinc recovered from Thursday losses, with the KDJ indicators turning bullish. LME zinc inventories extended their decline, and longs were willing to add positions. But a flip into contango structure raised questions about upward momentum in LME zinc. The contract is expected to trade between $2,360-2,410/mt today.

Nickel: Three-month LME nickel dropped below the support handle where the five- and 10-day moving average adhered to each other, to a low of $17,500/mt on Friday, before it recovered some ground to close 1.31% lower at $17,755/mt. Whether SHFE nickel could return above the five- and 10-day moving averages, as high as $18,000/mt, will come under scrutiny today.

Lead: Three-month LME lead rose to a high of $2,118/mt on Friday, the highest in six months, before it finished the trading day 1.13% higher at $2,109.5/mt.

Tin: Three-month LME tin declined to a low of $16,500/mt on Friday, its lowest in more than a week, before it ended 2.33% lower at $16,750/mt. Support is seen at $16,500/mt.