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SMM Morning Comments (Oct 11)
Oct 11,2019 09:43CST
price review forecast
LME base metals closed higher across the board, while the SHFE complex drifted mostly higher

SHANGHAI, Oct 11 (SMM) –

Copper: Hopes for a US-China trade deal and a weaker US dollar on growing expectations of another interest rate cut from the Fed bolstered copper prices overnight. Three-month LME copper hit a peak for October at $5,790/mt, before it finished the trading day 1.63% higher at $5,780.5/mt. The most active SHFE 1912 contract returned above the 47,000 yuan/mt level, advancing 0.88% overnight to 47,010 yuan/mt. Copper prices see strong traction in the short term, as positive macro developments outweigh a weakening global economy. Copper prices will likely hold onto their gains today, with LME copper at $5,750-5,800/mt and SHFE copper at 46,700-47,200 yuan/mt. Spot premiums are seen at 150-180 yuan/mt.

Aluminium: Three-month LME aluminium recovered from earlier losses to close Thursday trading 0.37% higher at $1,750/mt, as the British pound strengthened against the greenback. Upside potential in LME aluminium, however, will be limited by rising LME aluminium inventories. The contract is expected to move between $1,730-1,760/mt today. The most traded SHFE 1912 contract overnight gave back gains from a strong start bolstered by an over 1,000-lot increase in long positions. It ended 0.1% weaker at 13,865 yuan/mt. SHFE aluminium bucked the uptrend across the nonferrous complex overnight, suggesting that investors had limited interest in the metal. SHFE aluminium is likely to trade between 13,830-13,950 yuan/mt today.

Zinc: Three-month LME zinc rose to a four-week high on Thursday, as fears of supply tightness grew after Vedanta Resources said it would shut its Skorpion zinc operations in Namibia from early November until the end of February 2020. LME zinc gained 2.38% on the day and ended at $2,369/mt. Thursday’s jump nudged LME zinc into the range between the middle and upper Bollinger bands. LME zinc is expected to trade between $2,280-2,330/mt today, as investors’ focus will return from the zinc smelter shutdown headline to fundamentals. Falling LME zinc inventories and wider backwardation will continue to offer support. The most active SHFE 1911 contract kicked off overnight trading with a higher open, tracking gains in its LME counterpart, and held to a tight range around 19,000 yuan/mt. It ended up 1.12% at 19,000 yuan/mt, which suggested strong resistance at that level. SHFE zinc might reverse its gains after the market digests the news of the smelter suspension. It is expected to trade between 18,600-19,100 yuan/mt today, with spot premiums for 0#Shuangyan at 120-140 yuan/mt over the 1911 contract. .

Nickel: As the US dollar weakened, three-month LME nickel rallied on Thursday, gaining 1.47% to $17,595/mt. It is expected to try to remain above the five-day moving average and the $17,600/mt handle today. The most traded SHFE 1912 contract erased some earlier gains to close 0.56% higher at 137,000 yuan/mt overnight. Resistance is strong at 137,000 yuan/mt.

Lead: Three-month LME lead climbed to an intraday high of $2,168.5/mt on Thursday, before it eased to close the trading day 0.58% higher at $2,154/mt. LME lead clung to its recent highs, with the technical front showing a bullish picture. The most active SHFE 1911 contract followed its LME counterpart higher overnight, recovering from earlier losses to close up 0.3% at 16,965 yuan/mt. It underperformed LME lead. With limited buying enthusiasm across the market, SHFE lead is likely to sharply fall, if its LME counterpart pulls back.    

Tin: Three-month LME tin gained 0.27% to $16,445/mt on Thursday. Support is seen at $16,000/mt, while resistance is at the 40-day moving average as high as $16,600/mt. The most traded SHFE 2001 contract relinquished earlier gains to close 0.15% lower at 136,370 yuan/mt overnight. It was supported by the five- and 10-day moving averages. Resistance is seen at the 20-day moving average as high as 137,500 yuan/mt, while support is expected from the 40- and 60-day ones as low as 135,000 yuan/mt.

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