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SMM Morning Comments (Oct 10)
Oct 10,2019 09:35CST
price review forecast
SHFE base metals traded mixed overnight

SHANGHAI, Oct 10 (SMM) –

Copper: The robust greenback continued to weigh on copper prices overnight. Three-month LME copper inched up 0.08% to close at $5,688/mt on Wednesday. The most active SHFE 1912 contract fell to a new one-month low of 46,500 yuan/mt overnight, before it closed down 0.15% at 46,600 yuan/mt. Brexit and trade uncertainty continues to dampen the outlook for the world economy, and an increase in US crude inventories grew concerns about demand. Those developments are bearish for copper prices, and the fresh round of US-China trade talks will drive the copper market direction in the near term. Copper prices are likely to remain in their recent ranges, on low expectations for a swift end to the prolonged trade dispute. LME copper is expected to move between $5,650-5,700/mt, with SHFE copper at 46,400-46,800 yuan/mt. Spot premiums are seen firm at 120-150 yuan/mt, as downstream consumers buy on dips.

Aluminium: Three-month LME aluminium clawed back earlier losses to close a tad weaker at $1,743.5/mt on Wednesday. It remained under the 20- and 40-day moving averages. A robust US dollar and previous gains in LME aluminium inventories will keep the contract in a range of $1,730-1,760/mt today. The most traded SHFE 1912 contract held in a tight range of 13,900-13,920 yuan/mt overnight. It closed down 0.36% at 13,900 yuan/mt. With a lack of upward momentum, SHFE aluminium is expected to trade between 13,850-13,950 yuan/mt today. Spot premiums are seen 20-60 yuan/mt.

Zinc: Three-month LME zinc recovered from earlier losses to close 0.96% higher at $2,314/mt on Wednesday, registering a two-day winning streak. LME zinc held between the middle and lower Bollinger bands, as falling LME zinc inventories offered support and concerns about a global economic slowdown weighed. The contract is expected to continue its rangebound pattern today, with most transactions at $2,260-2,310/mt. The most active SHFE 1911 contract followed its LME counterpart higher overnight, but remained under pressure from the middle Bollinger band. It hit a two-week high of 18,900 yuan/mt before ending up 0.96% at 18,870 yuan/mt. The unwinding of short positions accounted for overnight gains in SHFE zinc, suggesting hesitant longs and limited further upward momentum in prices. SHFE zinc is likely to remain rangebound today, with the 1911 contract moving at 18,500-19,000 yuan/mt. Spot premiums for 0# Shuangyan are seen at 130-150 yuan/mt over the 1911 contract.

Nickel: A draw in LME nickel inventories and a weaker US dollar bolstered the three-month LME nickel to an intraday high of $17,645/mt on Wednesday, before the contract eased to close the trading day 0.63% lower at $17,340/mt. Resistance was strong at the five-day moving average, and whether LME nickel could remain above $17,300/mt will come under scrutiny today. The most traded SHFE 1912 contract dropped 1.52% to 134,780 yuan/mt overnight, as shorts loaded up positions. SHFE nickel is facing a resistance confluence of the five- and 10-day moving averages, and will struggle to cling to 135,000 yuan/mt today.  

Lead: Bargain-hunting lifted three-month LME lead from an earlier low of $2,117/mt to finish the trading day 0.19% higher at $2,141.5/mt on Wednesday. The $2,100/mt level should be closely watched, with support temporarily sustained at the 10-day moving average. The most active SHFE 1911 contract weakened 0.7% to 16,915 yuan/mt overnight, continuing the pullback from a three-week high hit on Tuesday. Whether SHFE lead could remain above the 60-day moving average should be monitored in the short term.

Tin: Three-month LME tin fluctuated to end 0.18% higher at $16,400/mt on Wednesday. Support is seen at $16,000/mt, while resistance is at the 20-day moving average as high as $16,500/mt. The most traded SHFE 2001 contract climbed to a one-week high of 137,280 yuan/mt overnight, before it reversed those gains to close marginally higher at 136,440 yuan/mt. Resistance is seen at the 20-day moving average as high as 137,800 yuan/mt, while support is at the 40- and 60-day moving averages as low as 135,000 yuan/mt.

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