SMM Morning Comments (Oct 31)

SHANGHAI, Oct 31 (SMM) – 

Copper: Greater-than-expected buildup in US crude oil stockpiles depressed oil prices and kept copper prices under pressure overnight. The metal may face further downward pressure from a potential higher US dollar, on the back of upbeat data on the third-quarter US economy. Three-month LME copper reversed increase from the previous three days and lost 0.57% to close at $5,887/mt. The most-traded SHFE December contract came off from a high of 47,570 yuan/mt and finished 0.17% lower at 47,400 yuan/mt. Any upward momentum in the contract may be capped amid pessimistic technical indicators. Today, the contract is seen hovering between 47,200-47,600 yuan/mt with LME copper between $5,860-5,910/mt. 

Aluminium: Three-month LME aluminium failed to extend rise from the prior three sessions as longs booked profits and left after prices climbed to a high of $1,763.5/mt. It ended slightly lower on the day at $1,751/mt. The most-traded SHFE December contract pared gains from the previous session as loaded-up shorts and departing longs weighed it to end 0.22% lower on the day at 13,815 yuan/mt. Trading range today is seen at 13,750-13,900 yuan/mt with LME aluminium at $1,730-1,770/mt. 

Zinc: Three-month LME zinc halted its five consecutive sessions of increase with a drop of 1.41% overnight, ending at $2,511/mt, dragged by market worries about a potential delay in US-China trade deal. Record low zinc inventories across LME-listed warehouses capped the decline in prices. The most-traded SHFE December contract continued to trim gains from Monday, as it fell for the third straight day by 0.42% to end at 19,025 yuan/mt. The KDJ indicators expanded downwards, indicating downside risk in prices. It is expected to trade between 18,700-19,200 yuan/mt today with LME zinc between $2,500-2,550/mt. 

Nickel: Three-month LME nickel consolidated between the five- and 60-day moving averages, closing down 0.18% at $16,790/mt, as supply concerns around reportedly immediate Indonesian ore export ban eased. The most-traded SHFE December contract climbed above the 20-day moving average and finished at 133,970 yuan/mt. It is likely to test resistance from 134,000 yuan/mt today with LME nickel extending its rangebound trend. 

Lead: Three-month LME lead plunged overnight as LME lead inventories rebounded, dragging prices below $2,200/mt before they ended down 2.83% at $2,194.5/mt. However, continued bullish signals from technical indicators may see LME lead rallying above $2,200/mt in the short term. The most-traded SHFE December contract also weakened but at a slower pace, closing down 0.21% at 16,695 yuan/mt. Support below from 16,500-16,600 yuan/mt will be monitored today. 

Tin: A decline in crude oil prices pressured prices of tin, with three-month LME tin losing $130/mt overnight to end at $16,700/mt and the most-traded SHFE January 2020 contract slipping to a low of 138,050 yuan/mt and closing at 138,220 yuan/mt, down 530 yuan/mt on the day. Support below from $16,600/mt and 137,600 yuan/mt, respectively, will be monitored today.