SMM Morning Comments (Nov 14)

SHANGHAI, Nov 14 (SMM) – 

Copper: LME copper unsuccessfully tested support at the daily moving average as slow growth in China’s social financing for October grew market pessimism. It closed at $6,070/mt after falling to a low of $6,043/mt overnight. On expectations of improved US-China trade tension, the SHFE 1901 contract rebounded after it fell below the daily moving average to a low of 48,860 yuan/mt. It settled at 49,020 yuan/mt. Despite a moderate decline overnight, the US dollar index remained at high levels, which will continue to weigh on copper prices in the short run. We expect LME copper to trade at $6,020-6,080/mt today with the SHFE 1901 contract trading at 48,800-49,100 yuan/mt. Spot offers are set at a discount of 20 yuan/mt to a premium of 30 yuan/mt today. 

Aluminium: The SHFE 1901 contract mostly hovered below the daily moving average, and rebounded a little with the highest level overnight at 13,840 yuan/mt. Limited upward momentum saw it grow 0.07% on the day and settle at 13,780 yuan/mt. It is likely to trade at 13,700-13,850 yuan/mt today with spot offers at a discount of 30 yuan/mt to a premium of 10 yuan/mt. LME aluminium traded relatively weaker overnight, pressured by high US dollar index. It stopped falling at $1,928/tmt and closed at $1,936/mt. Trading range is seen at $1,930-1,970/mt today. 

Zinc: LME zinc broke pressure at the 10- and 60-day moving average, and climbed to a high of $2,548/mt as optimism around US-China trade talks buoyed confidence across longs. It then consolidated around the $2,500/mt level and settled at $2,498/mt. The SHFE 1901 contract received support from current low-level social inventories. We expect it to trade rangebound at 20,850-21,300 yuan/mt today with its LME counterpart trading $2,480-2,530/mt today. 

Nickel: Record slowest growth of China’s M2 money supply and accumulated shorts lowered LME nickel by 0.18% and weighed the SHFE 1901 contract by 1.09% overnight. We expect LME nickel to trade around $11,300 /mt with the SHFE 1901 contract at 93,500-95,000 yuan/mt today. Spot prices are set at 94,500-106,000 yuan/mt.

Lead: Longs bolstered LME lead to a high of $1,955/mt during the European trading session. However, a high-level US dollar index capped upward room, and saw it close at $1,943.5/mt as longs took profits and left near closing. It is likely to test resistance at $2,000/mt today. The SHFE 1812 contract faced limited upward momentum, but support below remained effective at around 18,315 yuan/mt. It will continue to trade rangebound today.

Tin: LME tin came off after a gain, affected by lower US crude oil prices. It closed at $19,240/mt and may test pressure at $19,400/mt today. The SHFE 1901 contract inched down, with the lowest overnight at 150,490 yuan/mt, after five consecutive trading day of surges. It is likely to consolidate at highs in the short run.