SMM Morning Comments (Oct 25)

SHANGHAI, Oct 25 (SMM) – 

Copper: Unexpected improvement in US manufacturing data boosted copper prices overnight, but the gains were capped by bleak data of US durable goods orders, which intensified concerns about weakening global growth. Three-month LME copper retreated after climbed to a high of $5,902/mt, ending up 0.09% at $5,884/mt. The most-active SHFE December contract opened at highs of 47,480 yuan/mt and moved lower to touch a low of 47,260 yuan/mt, closing slightly higher on the day at 47,370 yuan/mt. The increase in prices may unlikely to sustain today, with the trading range expected at 47,100-47,500 yuan/mt for the SHFE contract and at $5,850-5,900/mt for LME copper. Weaker demand may weigh spot offers down to a discount of 10 yuan/mt today. 

Aluminium: While LME base metals ended mostly higher overnight, three-month LME aluminium slipped as downward pressure piled up after prices hovered rangebound for nearly two weeks. It closed down 0.55% at $1,717/mt, losing all the gains from the prior session. The most-traded SHFE December contract retreated after climbed, returning above the five- and 10- day moving averages and ending higher for the fourth straight day by 0.25% at 13,850 yuan/mt. Trading range today is expected at 13,750-13,900 yuan/mt with that for LME aluminium at $1,710-1,740/mt. 

Zinc: Three-month LME zinc outperformed its SHFE counterpart, as a continued decline in LME zinc inventories after stocks fell to their lowest levels in more than two decades supported LME zinc, which closed up 0.97% at $2,497/mt. The most-liquid SHFE December contract lost gains from the previous session after it unsuccessfully tested pressure from the daily moving average. With pressure from 19,000 yuan/mt and thinned spot trades, the contract may stay rangebound between 18,600-19,100 yuan/mt with LME zinc between $2,460-2,510/mt today. 

Nickel: Three-month LME nickel extended a rally from the previous two days and hit a high of $16,970/mt, before it trimmed some gains and closed 1.41% higher at $16,860/mt. The most-active SHFE December contract moved above the 10-day moving average but faced resistance from 133,500 yuan/mt, finishing 0.29% higher on the day at 133,470 yuan/mt. It may manage to hold firm above 134,000 yuan/mt today, with LME nickel testing the 60-day moving average, or $16,700/mt. 

Lead: Loaded-up longs sent three-month LME lead to a more than one-year high of $2,232/mt, extending increase from the prior two sessions. It finished 0.29% higher on the day at $2,223.5/mt, and is poised for further gains today with support form bullish position. The most-traded SHFE December contract tracked it LME counterpart higher and closed up 0.63% at 16,735 yuan/mt, reversing decline during the previous two days. But downside risks remain as the five-day moving average continued to trend downward.  

Tin: Three-month LME tin rallied from a low of $16,610/mt, ending $215/mt higher on the day at $16,795/mt. The most-traded SHFE January 2020 contract remained in a rangebound trend as it came off after climbed to a high of 139,380 yuan/mt and closed higher at 138,430 yuan/mt. Pressure above is seen from 140,000 yuan/mt with that for LME tin from $17,000/mt.