SMM Morning Comments (Mar 29)

SHANGHAI, Mar 29 (SMM) – 

Copper: While the US dollar strengthened, optimism around the latest round of US-China trade talks bolstered confidence in longs and lifted prices of copper. LME copper ended at $6,366.5/mt after increased to a high of $6,387.5/mt. The SHFE 1905 contract rebounded from a low of 48,430 yuan/mt, to above the daily moving average with the highest overnight at 48,620 yuan/mt. Support from the Bollinger lower band is likely to keep LME copper at $6,330-6,380/mt today. The SHFE 1905 contract is likely to trade at 48,300-48,700 yuan/mt today, with spot premiums at 1,100-1,250 yuan/mt amid quiet trades. 

Aluminium: LME aluminium rebounded and ended 0.11% higher overnight after it fell below support from the 40- and 60- day moving averages, to a low of $1,896/mt. The SHFE 1905 contract rallied to the five- and 20- day moving averages after shorts dragged it to a low of 13,655 yuan/mt. It is expected to trade at 13,500-13,800 yuan/mt today, with its LME counterpart at $1,870-1,930/mt. Spot premiums are seen at 250-290 yuan/mt. 

Zinc: A higher US dollar firm above 97 reduced LME zinc by 0.64% lower at $2,867/mt overnight, but fundamentals are likely to keep it above all moving averages, at $2,855-2,900/mt today. Recovering consumption is also expected to limit any downside room in the SHFE 1905 contract today, after the contract lost 0.4% and closed at 22,480 yuan/mt last night. 

Nickel: LME nickel received support from $12,950/mt, but unsuccessfully tested pressure from the 13,000 yuan/mt level, before a higher US dollar depressed it below the 40-day moving average, to a low of $12,825/mt. It ended at $12,875/mt, with LME nickel inventories shrinking 24 mt to 183,102 mt. The SHFE 1905 contract dropped after rose to a high of 100,450 yuan/mt, pressured by a stronger US dollar. Today, the contact is likely to trade at 99,000-101,000 yuan/mt with LME nickel at $12,800-13,000/mt. Spot prices are likely at 101,500-103,500 yuan/mt.

Lead: LME lead returned to around the daily moving average after rose to a high of $2,026/mt. However, pressure from shorts weighed it 0.32% lower overnight, at $2,013/mt. The SHFE 1905 contract partly recovered losses from early trades and ended 0.4% lower at 16,755 yuan/mt. While support from longs will continue today, fundamentals are expected to cap any rebound.

Tin: Lower LME tin inventories at 1,000 mt underpinned LME tin when the US dollar increased. It stood around the five- and 20- day moving averages, as it rallied from a low of $21,180/mt and rose to a high of $21,485/mt. Pressure above is set at $21,600/mt today. The SHFE 1905 contract settled 720 yuan/mt higher at 147,300 yuan/mt, after exiting shorts lifted it to a high of 147,470 yuan/mt. It is likely to trade with resistance at 148,000 yuan/mt today.