SMM Morning Comments (Aug 22)

SHANGHAI, Aug 22 (SMM) –

Copper: As the dollar continued to weaken, copper prices extended their gains overnight. LME copper rose to $6,050/mt and the SHFE 1810 contract inched up to 48,900 yuan/mt before it dipped. Reducing positions across shorts accounted for the uptick in SHFE copper prices. We expect LME copper to hover around $6,000/mt today and the SHFE 1810 contract to trade at the 10-day moving average at 48,800 yuan/mt. Inflows of imports are likely to weigh spot premiums to 110-160 yuan/mt.

Aluminium: LME aluminium strengthened to finish Tuesday at $2,064.5/mt and is expected to trade at $2,060-2,080/mt today. The SHFE 1810 contract rose to close at 14,710 yuan/mt overnight with open interests up 20,802 lots to 284,000 lots. We expect it to trade at 14,600-14,800 yuan/mt today with spot discounts of 80-40 yuan/mt.

Zinc: LME climbed above the five-day moving average to an intraday high of $2,450/mt, and ended Tuesday at $2,431/mt. We expect it to trade stably at $2,400-2,450/mt today. The SHFE 1810 contract opened higher overnight but traded under the pressure at the daily moving average with limited momentum and settled at 20,480 yuan/mt. We expect it to trade rangebound at 20,200-20,700 yuan/mt.

Nickel: LME nickel fell an intraday low at $13,510/mt before it found support at $13,500/mt and closed at $13,560/mt on Tuesday. As shorts added their positions and longs cut their positions, the SHFE 1811 contract tumbled and closed at 111,290 yuan/mt overnight. We expect nickel futures to continue to trade under pressure today. LME nickel is likely to hover around $13,600/mt with pressure at the 40-day moving average. The SHFE 1811 contract is likely to trade at 111,500-113,000 yuan/mt with pressure at the 60-day moving average. Spot prices are seen at 111,500-113,500 yuan/mt.

Lead: LME lead extended its uptick during the European trading session and rose a high of $2,021/mt. It gained $34.5/mt from Monday to close at $2,014.5/mt with open interests down 446 lots to 113,167 lots. As market sentiment improves, we expect it to consolidate at current levels today. The SHFE 1810 contract rebounded to a high of 17,720 yuan/mt with support below at 17,500 yuan/mt. However, with resistance, it is likely to trade rangebound around current levels today.

Tin: LME tin regained ground at the 10-day moving average and climbed up to an intraday high of $19,075/mt, and closed at $19,040/mt on Tuesday. We expect it to continue its growth in the short term with resistance at $19,400/mt. The SHFE 1901 contract rose to end overnight at 145,640 yuan/mt, buoyed by its strong LME counterpart. The SHFE 1901 contract is likely to encounter resistance at 146,500 yuan/mt.