SMM Morning Comments (Sep 19)

SHANGHAI, Sep 19 (SMM) – 

Copper: LME copper led the gains overnight and settled 2.36% higher at $6,091/mt when eased market worries buoyed most base metals. It broke resistance at the 40-day moving average as shorts exited, and may test pressure above at the 60-day moving average in the short run. The SHFE 1811 contract also closed higher at 49,610 yuan/mt after rising to a high of 49,730 yuan/mt. Spot premiums will remain firm at 250-310 yuan/mt today.  

Aluminium: Prices of aluminium are expected to have little downward room as market worries over trade conflict between China and the US eased after official decisions on tariffs were made Tuesday. LME aluminium rose to a high of $2,056.5/mt and settled at $2,029/mt overnight. We forecasts it to trade at $2,020-2,050/mt today with the SHFE 1811 contract at 14,430-14,530 yuan/mt. Spot offers are seen at a discount of 20 yuan/mt to a premium of 20 yuan/mt.  

Zinc: LME zinc climbed up overnight and settled at close to the 10-day moving average. It will continue to test pressure above today and hover at $2,340-2,390/mt. The SHFE 1811 contract may attempt to stand firm above the 60-day moving average today, and trade robustly at 20,800-21,300 yuan/mt with support from high demand from the infrastructure sector. Spot premiums for #0 common brand zinc are seen at 450-500 yuan/mt over the October contract. 

Nickel: Both LME nickel and the SHFE 1811 contract closed slightly higher as investors reduced concerns over the China-US trade war. Fresh US tariffs imposed on Chinese goods are expected to cause limited impact on the downstream stainless steel sector as China barely exports such products to the US. We expect LME nickel to consolidate around $12,300/mt today with the 1811 contract trading at 101,500-103,000 yuan/mt. Spot prices are set at 101,500-108,000 yuan/mt today. 

Lead: Limited upward room is expected for LME lead in the short run, given pressure at the 40-day moving average above, even though it registered the second consecutive trading day of increase overnight. The SHFE 1811 contract hovered at high levels with the highest overnight at 18,375 yuan/mt. Inflow of capitals should be closely watched today. 

Tin: LME tin traded rangebound overnight and closed at $18,945/mt. The SHFE 1901 contract slid as the US dollar rebounded, and lost all the gains during Tuesday’s afternoon to close at 144,000 yuan/mt. It will continue to trade with pressure today with support at 143,000 yuan/mt.