SMM Morning Comments (Nov 22)

SHANGHAI, Nov 22 (SMM) –

Copper: A stronger US dollar weighed on copper prices overnight, with three-month LME copper shedding 0.61% on the day to $5,818/mt and the most active SHFE contract losing 0.51% in overnight trading to 46,860 yuan/mt. Hopes for a US-China trade deal and higher oil prices will support copper prices today, but upside is likely to be limited by recent mixed signals on the progress of talks. LME copper is expected to move between $5,790-5,850/mt today, with SHFE copper at 46,800-47,100 yuan/mt. Despite lower prices of futures, spot premiums are seen lower at 40-80 yuan/mt as buyers will stand on the sidelines on the last trading day of the week.

Aluminium: Three-month LME aluminium fluctuated to end a tad weaker at $1,743.5/mt on Thursday. Aluminium stocks across LME warehouses continued to grow, standing at 1.17 million mt as of November 21, which will keep LME aluminium prices in check. The contract is expected to move sideways between $1,735-1,745/mt today. The most traded SHFE 2001 contract gained 0.18% to 13,860 yuan/mt overnight, as a sharp decline in domestic social inventories of primary aluminium this week kept bears cautious. SHFE aluminium is expected to move between 13,800-13,870 yuan/mt today. Spot premiums are seen at 80-120 yuan/mt over the SHFE 1912 contract.

Zinc: Three-month LME zinc extended its decline to its lowest since October 9 at $2,289.5/mt on Thursday, before it recovered to close 0.11% higher at $2,311/mt. While technical indicators showed some signs of a pause to the downtrend in LME zinc, a rebound in LME zinc inventories will exert downward pressure. LME zinc is expected to remain weak and move between $2,290-2,340/mt today. The most active SHFE 2001 contract held in a tight range around 18,070 yuan/mt overnight, and ended down 0.17% at 18,065 yuan/mt. SHFE zinc has fallen below all short-term moving averages, and KDJ indicators have shaped a death cross, suggesting strong resistance. SHFE zinc is expected to stay at lows today, with a range of 17,900-18,200 yuan/mt. Spot premiums for domestic 0# Shuangyan are seen at 110-140 yuan/mt over the SHFE 1912 contract.   

Nickel: Three-month LME nickel slid to a new low of $14,150/mt on Thursday, before it rallied to close up 1.22% at $14,505/mt, snapping a six-day losing streak. Whether it could remain above $14,500/mt is key to watch today. The most traded SHFE 2002 contract hovered around the daily moving average at 114,400 yuan/mt overnight, ending up 0.55% at 114,290 yuan/mt. Support lies at 113,000 yuan/mt, while resistance at the five-day moving average will come under scrutiny today.

Lead: Three-month LME lead continued its downtrend on Thursday, dropping 1.26% to end at $1,960.5/mt, after a brief rally on Tuesday. With bearishness across the market, LME lead is likely to fall further, which will lift the ratio of SHFE lead prices to LME lead as SHFE lead is supported by costs for secondary lead. The most active SHFE 2001 contract slipped to a session-low of 15,435 yuan/mt in early trade overnight, before it recovered some ground to close down 0.55% at 15,470 yuan/mt. SHFE lead is expected to trade rangebound today, as some bears will cover positions.

Tin: Tracking substantial gains in SHFE tin, three-month LME tin climbed to its highest since November 12 at $16,485/mt on Thursday, before it finished the trading day 2.09% higher at $16,355/mt. Resistance lies at the 40-day moving average at $16,500/mt. The most traded SHFE 2001 contract rose to a three-week high of 138,380 yuan/mt in early overnight trading, before it closed up 1.13% at 138,080 yuan/mt. SHFE tin has returned above all near-term moving averages, and resistance is seen at 139,000 yuan/mt, the high end of the trading range in October.