SMM Morning Comments (Nov 28)

SHANGHAI, Nov 28 (SMM) –

Copper: Three-month LME copper rose to its highest since November 8 at $5,968/mt on Wednesday, before it eased to close slightly higher at $5,948/mt. The most active SHFE 2001 contract held in a tight range after a higher open overnight, and closed up 0.42% at 47,470 yuan/mt. Upbeat US economic data and trade deal optimism improved market sentiment, bolstering stocks as well as copper prices. The absence of concrete developments in US-China trade talks will hamper upside in copper prices, and LME copper is expected to move between $5,900-5,960/mt today, with SHFE copper at 47,250-47,550 yuan/mt. Spot premiums are seen at 70-100 yuan/mt, and trades will weaken further as higher prices will sideline buyers at month-end and as limited inflows of seaborne materials deter sellers from lowering their offers.

Aluminium: Three-month LME aluminium advanced 0.68% to end at $1,772/mt on Wednesday, buoyed by positive economic data. It is expected to trade rangebound between $1,755-1,770/mt today. The most traded SHFE 2001 contract climbed to a session-high of 13,780 yuan/mt in early trade overnight, before it gave back much of those gains to close 0.11% higher at 13,750 yuan/mt. Shandong Weiqiao’s plan to move about 2 million mt of capacity from Shandong to Yunnan is likely to help ease supply pressure in the first half of 2020 and may support SHFE aluminium in the short term, but prices remain bearish from a longer-term perspective. The SHFE 2001 contract is expected to move between 13,700-13,800 yuan/mt today, with spot premiums of 90-130 yuan/mt over the SHFE 1912 contract.  

Zinc: Three-month LME zinc erased earlier gains to close down 0.69% at $2,293/mt on Wednesday, as its upward momentum was hampered by expectations of a substantial increase in mine supply next year and a firm US dollar. Resistance lies at the five-day moving average, while support lies at the lower Bollinger band. Zinc stocks at LME warehouses continued to fall on Wednesday, which is likely to lend some support to prices. LME zinc is expected to trade rangebound to establish a bottom in the near term, and move between $2,260-2,330/mt today. Shorts pulled the most active SHFE 2001 contract to a session-low of 17,960 yuan/mt overnight, before the contract recovered on short-covering to end a tad lower at 18,005 yuan/mt. SHFE zinc clang to the five-day moving average overnight, and is expected to hover at recent lows in the short term, supported by firmness in nearby consumption as downstream consumers have no plan to slow production in the coming month. The SHFE 2001 contract is expected to trade between 17,850-18,250 yuan/mt today. Spot premiums for domestic 0# Shuangyan are seen at 130-150 yuan/mt over the SHFE 1912 contract.  

Nickel: Three-month LME nickel eased 1.34% to $14,360/mt on Wednesday, falling below the five-day moving average. LME nickel faced a strong resistance confluence of the five- and 10-day moving averages. Support at $14,200/mt should be xlosely watched today. The most traded SHFE 2002 contract slipped 0.65% to end at 113,020 yuan/mt overnight, as shorts added positions. Strong resistance lies at the five-day moving average at 114,000 yuan/mt.

Lead: Three-month LME lead climbed to a session-high of $1,966.5/mt on Wednesday, before it relinquished those gains to close slightly lower at $1,942.5/mt. In the short run, LME lead is likely to stay at recent lows or even drop further. Shorts knocked the most active SHFE 2001 contract to a new low of 15,205 yuan/mt overnight, before the contract rallied to end up 0.36% at 15,350 yuan/mt. Bearish investors appeared to be divided in the 15,200-15,300 area, with some choosing to unwind their positions. Support is seen at 15,300 yuan/mt.

Tin: Three-month LME tin recouped earlier losses to end 0.24% firmer at $16,415/mt on Wednesday. LME tin remained supported by the five-day moving average. Resistance is seen at the 40-day moving average at $16,500/mt. As longs loaded up positions, the most traded SHFE 2001 contract climbed to a session-high of 139,170 yuan/mt overnight, before it finished 0.27% higher at 138,790 yuan/mt. SHFE tin resides around the five-day moving average, and resistance is seen at 139,500 yuan/mt.