SMM Morning Comments (Nov 26)

SHANGHAI, Nov 26 (SMM) –

Copper: Three-month LME copper climbed to a two-week high of $5,917/mt on Monday, before it eased to end up 0.32% at $5,871/mt. The most active SHFE 2001 contract pared earlier gains to close a tad higher at 47,100 yuan/mt overnight. While positive news flow on the US-China trade front and upbeat US economic data improved broader market sentiment and boosted stocks, momentum is lacking in recent rallies in copper prices, as investors remained cautious about the demand outlook. LME copper is expected to trade between $5,850-5,910/mt today, with SHFE copper at 46,950-47,250 yuan/mt. Spot premiums are seen at 80-120 yuan/mt.

Aluminium: Three-month LME aluminium slipped to a session-low of $1,733/mt on Monday, before it recovered to close 0.11% higher at $1,742/mt. It is expected to oscillate between $1,730-1,745/mt today. As shorts aggressively added their positions, the most traded SHFE 2001 contract slid to a session-low of 13,750 yuan/mt overnight, before it recouped some losses to finish down 0.58% at 13,755 yuan/mt. Stable consumption limited downside in SHFE aluminium, which is expected to move between 13,720-13,800 yuan/mt today. Spot premiums are seen at 100-140 yuan/mt over the SHFE 1912 contract.  

Zinc: Three-month LME zinc extended its decline on Monday, slipping to new seven-week low of $2,279/mt before closing down 1.06% at $2,282.5/mt. While LME zinc inventories shrank 0.63%, LME zinc fell for nine days in the past 10 days, on expectations of greater mine supply next year and mixed signals on US-China trade talks. Strong resistance lies at the five-day moving average. LME zinc is expected to trade between $2,260-2,330/mt today, and support at the lower Bollinger band should be closely monitored. The most active SHFE 2001 contract slipped to a session-low of 17,920 yuan/mt overnight, before it ended down 0.55% at 17,940 yuan/mt. SHFE zinc resides around the lower Bollinger band and is under the pressure from the five-day moving average. A further decline in social inventories across Shanghai, Tianjin and Guangdong will offer some support to prices. SHFE zinc is expected to move at 17,850-18,250 yuan/mt today.

Nickel: Three-month LME nickel reversed earlier gains to close down 1.13% at $14,475/mt on Monday. Whether it could remain above the five-day moving average and $14,500/mt handle will come under scrutiny today. The most traded SHFE 2002 contract dropped to a session-low of 113,260 yuan/mt overnight, before it recovered some ground to end down 0.61% at 114,010 yuan/mt. Whether SHFE nickel could hold above the five-day moving average and 114,000 yuan/mt level should be closely watched today.

Lead: Three-month LME lead dropping 1.81% to end at its lowest since August 5 at $1,930/mt on Monday, resuming its downtrend after a pause late last week. Possibility remains that LME lead will extend its decline in the near term. The most active SHFE 2001 contract tracked losses in its LME counterpart to a new three-year low of 15,335 yuan/mt overnight, before it closed down 1.32% at 15,365 yuan/mt. SHFE lead is likely to see limited downside in the short term, as squeezed margins may prompt secondary lead smelters to trim production.

Tin: Three-month LME tin rose to a two-week high of $16,495/mt on Monday, before it erased some gains to close up 0.46% at $16,425/mt. Resistance is seen at the 40-day moving average at $16,500/mt. The most traded SHFE 2001 contract hovered around the daily moving average at 138,700 yuan/mt overnight, ending marginally higher at 138,860 yuan/mt. SHFE tin remained above all near-term moving averages, with resistance seen at 139,500 yuan/mt.