SMM Morning Comments (Sep 17)

SHANGHAI, Sep 17 (SMM) –

Copper: A US dollar rally and downbeat Chinese economic data weighed on copper prices overnight. Three-month LME shed 1.86% on the day and ended at $5,855/mt, while the most active SHFE 1911 contract fell 0.86% to end at a session-low of 47,280 yuan/mt. Copper prices are expected to remain rangebound at lows today, in a weak macro environment. Technical indicators also indicated limited steam in SHFE copper, which now stands below the upper Bollinger band and saw a shortened MACD red bar. LME copper is expected to trade between $5,830-5,880/mt today, with SHFE copper at 47,000-47,500 yuan/mt. Spot premiums are seen firm at 130-160 yuan/mt, as lower prices of futures will attract buyers.  

Aluminium: Three-month LME aluminium came off from earlier highs to end at $1,787.5/mt, lows in a week. It lost 1.41% on the day, and the buildup of short positions mainly accounted for the decline. LME aluminium is expected to trade between $1,780-1,830/mt today, with support sustained at the 40-day moving average. The unwinding of long positions on risk aversion sent the most traded SHFE 1911 contract to a one-week low of 14,240 yuan/mt during early overnight trading, and the contract failed to recover in the rest of trading hours, ending 0.59% lower at 14,265 yuan/mt. Inventory growth over the holiday weekend, worries about weaker demand and greater supply in the fourth quarter dampened morale among longs. SHFE aluminium is expected to trade rangebound at 14,300-14,400 yuan/mt today, with spot premiums of 30-50 yuan/mt over the 1910 contract.

Zinc: Three-month LME zinc climbed to a high of $2,404.5/mt, its highest in more than six weeks, on Monday, before it erased all those gains to end 1.42% lower at $2,356/mt. KDJ indicators reversed to expand downwards, suggesting a downtrend in LME zinc, but downside room will be limited by consecutive declines in LME zinc inventories and a thaw in US-China trade war. LME zinc is expected to trade between $2,340-2,390/mt today. The most active SHFE 1911 contract eased overnight, shedding 0.65% to close at 19,170 yuan/mt. Despite improving consumption in a traditional high season, inventories failed to substantially decline amid robust supply. SHFE zinc is expected to trade between 19,000-19,500 yuan/mt today, with spot 0# Shuangyan in a premium of 140-160 yuan/mt over the 1910 contract.  

Nickel: Three-month LME nickel continued its pullback on Monday, declining 2.59% to end at $17,295/mt. Whether the 20-day moving average could help LME nickel remain above $17,100/mt will come under scrutiny today. The most traded SHFE 1911 contract clawed back some earlier losses to finish overnight trading 0.87% lower at 138,250 yuan/mt, still away from the five- and 10-day moving averages. Whether SHFE nickel could hold above 136,000 yuan/mt will come under scrutiny today.

Lead: Three-month LME lead hit a new six-month high of $2,121/mt on Monday, before it gave up all those gains to close the day 0.55% lower at $2,098/mt. LME lead failed to convincingly stand above $2,100/mt, though it stayed at highs. The most active SHFE 1910 contract dropped to a three-week low of 17,150 yuan/mt overnight, before it ended 1.21% lower at 17,165 yuan/mt. Overnight sharp decline knocked SHFE lead out of its previous range, and the contract is expected to further give back its earlier gains in the short term.

Tin: Three-month LME tin rebounded on Monday, gaining 1.55% to close at $17,010/mt. The $16,500/mt will continue to offer support. The most traded SHFE 2001 contract also rallied overnight, rising to a session-high of 138,880 yuan/mt before easing to end 0.53% higher at 137,730 yuan/mt. Resistance is seen at 139,500 yuan/mt, where the five- and 10-day moving averages stay, while support is at the 60-day moving average, as low as 136,000 yuan/mt.