SMM Morning Comments (Nov 20)

SHANGHAI, Nov 20 (SMM) –

Copper: Copper prices rallied overnight, as market sentiment improved after the US granted Huawei a new 90-day license extension and data showed upbeat housing starts and building permits in the US in October. Three-month LME copper rose to a one-week high of $5,894/mt before ending up 1.06% at $5,880/mt, and the most active SHFE 2001 contract gained 0.58% overnight to 47,130 yuan/mt. Persisting uncertainty around trade talks between Washington and Beijing and lower oil prices on a sharp inventory increase, however, are likely to force copper prices to reverse their gains today. LME copper is expected to trade between $5,820-5,880/mt, with SHFE copper at 46,900-47,200 yuan/mt. Spot premiums are seen at 100-140 yuan/mt, supported by the need to fulfill long-term contracts  

Aluminium: Three-month LME aluminium fell to the lowest in more than three weeks at $1,728/mt on Tuesday, before it recouped those losses to end marginally higher at $1,737/mt. Inventories of aluminium across LME-approved warehouses extended their increase to 1.16 million mt as of November 19. LME aluminium is expected to remain under pressure today, and trade between $1,730-1,750/mt. The most traded SHFE 2001 contract hovered in a tight range around the daily moving average overnight, and ended a tad weaker at 13,745 yuan/mt. Falling inventories domestically kept SHFE aluminium from declining significantly in the near term, but the potential for a broad decline in the medium term remains. SHFE aluminium is expected to move between 13,720-13,750 yuan/mt today, with spot premiums of 80-120 yuan/mt over the SHFE 1912 contract.   

Zinc: Three-month LME zinc fluctuated to end down 0.32% at $2,344/mt on Tuesday, marking the sixth straight day of decline. With technical indicators in a bearish bias, LME zinc is expected to remain weak today, with a range of $2,320-2,370/mt, but falling LME zinc inventories will lend some support. The most active SHFE 2001 contract climbed above the five-day moving average to a session-high of 18,400 yuan/mt in early trade overnight, before it eased to close 0.44% higher at 18,340 yuan/mt. SHFE zinc is expected to waver between 18,200-18,500 yuan/mt today, weighed by a stabilised US dollar and resistance from moving averages but supported by the lower Bollinger band. Spot premiums of domestic 0# Shuangyan are seen at 90-110 yuan/mt over the SHFE 1912 contract.

Nickel: Three-month LME nickel continued to trend downwards on Tuesday, plumbing the lowest since August 5 at $14,475/mt before ending down 0.91% at $14,640/mt. Strength at the lower Bollinger band will come under scrutiny today. The most traded SHFE 2002 contract slipped to its lowest since August 2 at 113,800 yuan/mt in early trade overnight, before it recovered some ground to close down 0.76% at 115,200 yuan/mt. Whether SHFE nickel could cling to 115,000 yuan/mt should be closely watched today.

Lead: Three-month LME lead rallied 1.53% on Tuesday to end at $1,993/mt, after seven consecutive days of losses. This is set to help improve market sentiment. LME lead is expected to trade rangebound in the short term, with strong pressure at $2,000/mt. The most active SHFE 2001 contract followed LME lead higher to a session-high of 15,725 yuan/mt in early trade overnight, before it erased those gains to end down 0.29% at 15,650 yuan/mt. SHFE lead is also expected to remain rangebound in the short run, pressured by the five-day moving average but supported by costs.

Tin: Three-month LME tin reversed earlier gains to a low of $15,920/mt, the lowest since October, on Tuesday, before it finished the trading day 0.44% lower at $15,950/mt. Support is seen at $15,500/mt. The most traded SHFE 2001 contract slipped to a session-low of 134,200 yuan/mt in early trade overnight, before it clawed back those losses to end a tad higher at 134,680 yuan/mt. Support is seen at 134,000 yuan/mt, while resistance is at a previous high of 135,500 yuan/mt.