SMM Morning Comments (Oct 8)

SHANGHAI, Oct 8 (SMM) –

Chinese market closed from October 1-7 for the national Day holiday, and will return to trading today.  

Copper: Three-month LME copper advanced 0.61% to $5,707.5/mt on Monday, as investors looked ahead to a fresh round of US-China trade talks. Expectations of an interest rate cut from the Fed grew after the release of weak US manufacturing data, though US unemployment rate dropped to near a 50-year low. This subdued the greenback, and supported copper prices. Upside in copper prices is limited, however, as the US dollar will remain firm even if the Fed cuts the interest rate the third time for the year. Deteriorating economic conditions and geopolitical turmoil grew concerns about demand for copper, while copper consumption in China was not as strong as previously expected of a high season. Those factors will keep copper in a bearish bias. LME copper is expected to trade between $5,670-5,720/mt today, with SHFE copper at 46,500-47,000 yuan/mt. Spot premiums are seen at 20-100 yuan/mt.

Aluminium: Three-month LME aluminium recovered from earlier losses to end at a more than one-week high of $1,751/mt on Monday. It gained 1.45% on the day, recovering losses from last week when it touched the lowest since January 2017. Data showed that LME aluminium inventories declined 2,300 mt on Monday to 964,225 mt, after consecutive days of gains. High inventories and a lack of developments on fundamentals will keep LME aluminium under $1,800/mt. The contract is expected to hover between $1,720-1,760/mt today.

Zinc: Three-month LME zinc dropped 0.91% on Monday and ended at $2,290.5/mt, remaining under the pressure from the middle Bollinger band. Friday’s rally, bolstered by a positive US jobs report, helped the contract close last week 0.09% higher. Weak factory activity data from China, the US and eurozone released last week grew fears of a world economic slowdown, which will dampen upward momentum in LME zinc. The contract is expected to trade between $2,270-2,320/mt today. A weak LME counterpart and expectations of greater supply after the week-long holiday will weigh on SHFE zinc, with the most active 1911 contract likely to move between 18,500-19,000 yuan/mt today. Spot premiums for 0# Shuangyan are seen at 100-130 yuan/mt over the SHFE 1910 contract.

Nickel: Three-month LME nickel edged down 0.06% to close at $17,710/mt on Monday. LME nickel inventories dropped last week, which helped push prices 2.96% higher.

Lead: Three-month LME lead climbed to a 14-month high of $2,192/mt on Monday before it erased some gains to close the trading day 0.6% higher at $2,182/mt. This came after the metal surged 4.48% on lower LME lead inventories and the weaker greenback last week, keeping technical indicators in a bullish bias.  

Tin: A US dollar rally and oil price decline pulled three month LME tin from earlier highs to an intraday low of $16,360/mt on Monday, before the contract closed the trading day 0.24% lower at $16,435/mt. Support is seen at the 10-day moving average and $16,300/mt, while resistance is at $16,700/mt, a confluence of the 20- and 40-day moving averages.