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SMM Morning Comments (Sep 23)

iconSep 23, 2019 09:42
Source:SMM
SHFE base metals traded mixed on Friday night

SHANGHAI, Sep 23 (SMM) –

Copper: A stronger US dollar weighed on copper prices on Friday night, with three-month LME copper declining for a fifth day in a row and losing 0.66% to $5,755/mt. The most active SHFE 1911 contract slipped 0.23% to end at 47,020 yuan/mt. CMX gold, meanwhile, rose to a high of $1,524/oz, as investors flowed to safe-havens amid uncertainty surrounding the US-China trade dispute. Recovering consumption and falling inventories in China, however, will offer some support to copper prices. LME copper is expected to trade between $5,770-5,820/mt today, with SHFE copper at 46,900-47,300 yuan/mt. Spot premiums are seen firmer at 150-200 yuan/mt, as lower prices of futures and pre-holiday stockpiling will deter sellers from slashing their quotes.

Aluminium: Three-month LME aluminium shed 0.53% to end at an intraday low of $1,785.5/mt on Friday. It is expected to trade at $1,780-1,830/mt today. The most traded SHFE 1911 contract hovered in a tight range on Friday night, as longs and shorts trimmed their positions. It gained 0.21% on the session and closed at 14,225 yuan/mt. SHFE aluminium is expected to remain rangebound today, in a range of 14,100-14,300 yuan/mt. Spot premiums are seen at 20-40 yuan/mt over the 1910 contract.

Zinc: Resistance from the 10-day moving average knocked three-month LME zinc below the $2,300/mt handle to close 1.12% lower at $2,293.5/mt on Friday. While LME zinc inventories continued to fall, the narrowing backwardation on LME zinc lowered the expectations of further declines in the stocks. LME zinc is expected to trade rangebound between $2,280-2,330/mt today. The most active SHFE 1911 contract fell for a third straight day to a more than two-week low of 18,805 yuan/mt on Friday night, before the middle Bollinger band helped it claw back some losses to end 0.5% weaker at 18,845 yuan/mt. Shorts contributed to the gain in open interest on Friday night, suggesting a lack of confidence among longs. This, together with gains in social inventories of refined zinc across Shanghai, Tianjin and Guangdong, will hamper upward momentum in SHFE zinc. The possibility of better-than-expected consumption, however, will buoy SHFE zinc, as downstream consumers in north China have yet to be required to cut or suspend production as expected, in the run-up to Beijing’s celebration of the 70th founding anniversary. The SHFE 1911 zinc contract is expected to waver between 18,600-19,100 yuan/mt today, with spot premiums of 0# Shuangyan at 90-120 yuan/mt over the 1910 contract.

Nickel: Three-month LME nickel surpassed the 10-day moving average to a four-day high of $17,890/mt on Friday, before a stronger US dollar forced it to relinquish some gains to end the day 0.46% higher at $17,380/mt. Whether LME nickel could convincingly break the 10-day moving average will come under scrutiny today. The most traded SHFE 1911 contract rose to a one-week high of 139,960 yuan/mt on Friday night, before it eased to hover around 139,000 yuan/mt under the pressure from the 10-day moving average. SHFE nickel finished the session up 1.84% at 139,310 yuan/mt. SHFE nickel has stood above the five- and 20-day moving averages, and whether it could break the 10-day one, and 140,000 yuan/mt, should be closely watched today.

Lead: Three-month LME lead climbed on Friday for a third straight day to a high of $2,125/mt, the highest in more than six months, before it eased to end up 1.05% at $2,116/mt. The most active SHFE 1911 contract, however, weakened 0.12% on Friday night, and closed at 16,845 yuan/mt. News of environmental restrictions failed to push SHFE lead out of its recent range, growing the chance of a broader downtrend in the short term.

Tin: Three-month LME tin rallied from a nearly three-week low of $16,380/mt on Friday, to close 0.91% higher at $16,705/mt. LME tin remains under pressure from the 20-day moving average, with support sustained at $16,500/mt. The load-up of long positions bolstered the most traded SHFE 2001 contract to a session-high of 138,450 yuan/mt on Friday night, before it hovered around 138,000 yuan/mt in the rest of trading hours. SHFE tin ended 1.3% higher at 138,220 yuan/mt. It now resides around the five-day moving average, with pressure from the 10-day one and support from the 20-day one. The 136,000 yuan/mt level will also offer support.

Morning comments
Copper
Aluminium
Zinc
Lead
Nickel
Tin

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