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SMM Morning Comments (Oct 16)
Oct 16,2019 09:42CST
price review forecast
SHFE base metals traded mixed overnight

SHANGHAI, Oct 16 (SMM) –

Copper: Three-month LME copper pulled back from three-week highs on Tuesday, shedding 0.76% to $5,775.5/mt, as investors remained cautious amid concerns about global economic growth. The most active SHFE 1912 contract fluctuated to close flat at 46,940 yuan/mt overnight. The pound surged against the US dollar on hopes for an imminent draft Brexit deal, which will be positive for copper prices. The trade truce between Beijing and Washington reached last week, and better-than-expected Chinese financial data released on Tuesday will also help shore up copper prices today. LME copper is expected to trade between $5,760-5,820/mt, with SHFE copper at 46,800-47,300 yuan/mt. Spot premiums are seen lower at 40-60 yuan/mt, in view of high inventories.

Aluminium: Three-month LME aluminium recovered from earlier losses to close 0.61% higher at $1,729.5/mt on Tuesday, as shorts trimmed their positions. LME aluminium remained under pressure from moving averages, and is expected to trade between $1,710-1,740/mt today. The most traded SHFE 1912 contract advanced 0.29% to end at 13,790 yuan/mt overnight. An ongoing high consumption season, new capacity commissioning delays and higher alumina prices will provide support to SHFE aluminium in the short term. The contract is expected to trade between 13,720-13,820 yuan/mt today, with spot premiums of 20-60 yuan/mt.

Zinc: Three-month LME zinc refreshed the highest since August at $2,441/mt on Tuesday, before it relinquished some gains to finish the trading day 0.35% higher at $2,425.5/mt. LME zinc rebounded after a decline on Monday, supported by falling LME zinc inventories and firm backwardation which suggests tightness in supply overseas. LME zinc is expected to further strengthen today, moving at $2,400-2,450/mt. Weak Chinese data prompted Shanghai zinc shorts to load up positions overnight, weighing on the most active SHFE 1912 contract, which came off from earlier highs and shed 0.16% to 18,965 yuan/mt. While SHFE zinc has yet lost support from moving averages, it has limited upward momentum and will likely move between 18,700-19,200 yuan/mt today. Spot premiums for 0# Shuangyan are seen at 110-130 yuan/mt over the SHFE 1911 contract.  

Nickel: Three-month LME nickel fell for a third straight day on Tuesday, losing 1.65% to $17,010/mt. This sent it below several moving averages. Whether LME nickel could cling to the $17,000/mt level will be closely watched today. The most traded SHFE 1912 contract shed 0.45% overnight and ended at 133,180 yuan/mt. Whether it could remain above 133,000 yuan/mt and resistance at the 40-day moving average will come under scrutiny today.

Lead: Three-month LME lead rebounded to an intraday high of $2,161/mt on Tuesday, before it eased to close 0.51% higher at $2,149/mt. LME lead managed to hold onto its recent highs, with technical indicators remaining in a bullish bias. The most active SHFE 1911 contract returned above the 60-day moving average to a session-high of 16,985 yuan/mt overnight, before it erased some gains to end 0.65% up at 16,930 yuan/mt. SHFE lead still faces risks of a broad downtrend.

Tin: Three-month LME tin rose to a three-week high of $16,735/mt on Tuesday, before it ended up 1.03% on the day at $16,720/mt. Support is seen at the 20-day moving average as low as $16,500/mt, while resistance is at the 60-day moving average as high as $16,800/mt. The most traded SHFE 2001 contract also hit its highest since September 24 at 138,340 yuan/mt overnight, before it closed up 0.78% at 138,030 yuan/mt. SHFE tin is expected to try to convincingly surpass the previous high of 138,000 yuan/mt, with support at the 10-day moving average as low as 136,300 yuan/mt.   

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