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SMM Morning Comments (Oct 14)
Oct 14,2019 09:30CST
price review forecast
SHFE base metals traded mixed on Friday night

SHANGHAI, Oct 14 (SMM) –

Copper: Copper prices strengthened on Friday night as investors tracked positive signals around US-China trade talks and Brexit. Three-month LME copper rose to a three-week high of $5,825/mt before closing the trading day 0.39% higher at $5,803/mt. The most active SHFE 1912 contract hit a one-week high of 47,210 yuan/mt before closing 0.4% higher at 47,110 yuan/mt. SHFE copper has stood above several moving averages. Copper prices are likely to extend their gains today. LME copper is expected to trade between $5,780-5,840/mt, with SHFE copper at 46,900-47,300 yuan/mt. Spot premiums are seen lower at 60-110 yuan/mt, with downside limited ahead of October delivery.

Aluminium: Three-month LME aluminium fell on Friday, losing 1.6% to $1,722/mt. An over 600-lot build of short position subdued the most traded SHFE 1912 contract at open on Friday night, which shed 0.62% to end at 13,735 yuan/mt. SHFE aluminium is unlikely to rebound sharply in the short term amid lack of positive news. The contract is expected to trade between 13,700-13,800 yuan/mt today.

Zinc: Three-month LME zinc rose beyond $2,400/mt to the highest since August on Friday, and finished the trading day 2.28% higher at $2,423/mt, registering a four-day winning streak. Market euphoria for a partial US-China trade deal, combined with falling LME zinc inventories bolstered LME zinc. Upside potential in LME zinc, however, will be hampered by lingering uncertainty surrounding macro events. The contract is expected to move between $2,360-2,420/mt today. The most active SHFE 1912 contract followed its LME counterpart to a high of 19,175 yuan/mt, the highest in more than three weeks, on Friday night, before it relinquished some gains to end 0.63% higher at 19,090 yuan/mt. SMM data showed that social inventories of refined zinc across Shanghai, Tianjin and Guangdong declined over 7,000 mt last week, meeting the expectations of lower inventories after the week-long holiday. The SHFE 1912 zinc contract is expected to trade between 18,800-19,300 yuan/mt today, with spot premiums for 0# Shuangyan at 120-140 yuan/mt over the 1911 contract.

Nickel: Three-month LME nickel gave back earlier gains to end 0.4% weaker at $17,525/mt on Friday. The most traded SHFE 1912 contract also fell off an earlier high of 138,890 yuan/mt on Friday night, as longs trimmed their positions. It finished the session 0.23% lower at 136,220 yuan/mt.

Lead: As the US dollar sharply weakened, three-month LME lead on Friday rose to a high of $2,195/mt, the highest since August 2018. Strong resistance at $2,200/mt forced LME lead to erase some gains to close 1.07% higher at $2,177/mt. LME lead is expected to continue to test the $2,200/mt handle today. The most active SHFE 1911 contract rose to a high of 17,065 yuan/mt on Friday night, as longs flocked to the market, tracking gains in LME lead. SHFE lead advanced 0.71% to end at 17,040 yuan/mt. Positive macro developments accounted for the rally in SHFE lead, and whether it could remain above 17,000 yuan/mt will be closely watched today.  

Tin: Three-month LME tin climbed 1.19% to end at a one-week high of $16,640/mt on Friday, bolstered by data showing that Indonesia’s exports of refined tin dropped 41% from a year ago in September. Resistance for LME tin is seen at the 60-day moving average as high as $16,800/mt. The most traded SHFE 2001 contract rose to a session-high of 137,230 yuan/mt on Friday night, before it gave up all those gains to end 0.13% weaker at 136,210 yuan/mt. Resistance is seen at the 20-day moving average as high as 137,300 yuan/mt, while support is at the 40- and 60-day ones as low as 135,000 yuan/mt.

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