SMM Morning Comments (Jan 21)

SHANGHAI, Jan 21 (SMM) –

Copper: Copper prices extended their decline overnight, as risk aversion grew on lingering concerns about the Middle East tensions and Trump impeachment trial. Three-month LME copper slipped to a one-week low of $6,247/mt, before it closed the trading day 0.1% weaker at $6,263/mt. The most active SHFE 2003 contract shed 0.45% in overnight trading to end at 48,900 yuan/mt. Upbeat economic data out of the US and China, however, will remain supportive to copper prices. LME copper is expected to move between $6,230-6,290/mt today, with SHFE copper at 48,750-49,050 yuan/mt. Spot discounts are seen at 70-30 yuan/mt, and lower futures prices may spur some purchases amid holiday-lulled trading.

Aluminium: Three-month LME aluminium advanced 0.64% on Monday to end at $1,817/mt, its highest close in two weeks. It is expected to trade between $1,790-1,825/mt today. The most traded SHFE 2003 contract weakened 0.11% in overnight trading and ended at 14,225 yuan/mt. It is likely to move at 14,150-14,300 yuan/mt today. Spot prices have flipped into discounts, which are seen at a maximum of 80 yuan/mt against the SHFE 2002 contract.

Zinc: Three-month LME zinc climbed to its highest in more than two months at $2,448/mt on Monday, before it finished the trading day 0.39% higher at $2,439/mt. Zinc inventories across LME warehouses continued to fall, dipping 0.63% on the day to 51,125 mt. LME zinc has yet to shrug off resistance at the upper Bollinger band, and is expected to trade between $2,410-2,460/mt today. The most active SHFE 2003 contract followed its LME counterpart higher to 18,490 yuan/mt, its highest in more than a week, in early trade overnight, before it eased on profit-taking caused by concerns about weakening demand in the lead-up to the Chinese New Year holiday and closed 0.14% higher at 18,415 yuan/mt. Growing inventories and stagnated consumption are set to limit further upside in SHFE zinc this week. The SHFE 2003 contract is expected to trade at 18,100-18,500 yuan/mt today. Spot premiums for domestic 0# Shuangyan are seen at 100-120 yuan/mt over the SHFE 2002 contract.

Nickel: Three-month LME nickel rose swiftly to an intraday high of $14,175/mt overnight, before erased much of those gains to end the trading day 0.57% higher at $14,015/mt. Resistance lies at $14,100/mt, and whether LME nickel could remain above $14,000/mt will come under scrutiny today. The most traded SHFE 2003 contract climbed to a session-high of 110,300 yuan/mt in overnight trading, before it eased to the daily moving average and ended 1.04% stronger at 109,430 yuan/mt. SHFE nickel now faces a resistance confluence of several moving averages.

Lead: Three-month LME lead reversed earlier gains to an intraday low of $1,957.5/mt on Monday, before it closed the trading day 0.83% lower at $1,963.5/mt. LME lead has declined for three consecutive days, and is unlikely to strengthen in the short run. The most active SHFE 2003 contract pulled back overnight, shedding 0.39% to end 15,265 yuan/mt, as longs exited from the market. SHFE lead is expected to be struck within a tight range ahead of the Chinese New Year holiday.

Tin: Three-month LME tin extended its gains on Monday, advancing 0.37% to close at $17,845/mt, its highest close since late July. Resistance is seen at $18,000/mt. As shorts trimmed their positions, the most traded SHFE 2006 contract gained 0.46% to end at 140,760 yuan/mt in overnight trading. Resistance is seen at the 40-day moving average at 141,700 yuan/mt.