SMM Morning Comments (Aug 13)

SHANGHAI, Aug 13 (SMM) –

Copper: LME copper failed to climb above the $6,200/mt level and fell to near $6,150/mt on Friday while the SHFE 1810 contract hovered at 49,600-49,850 yuan/mt. Open interest for SHFE copper rebounded above 600,000 lots. We expect LME copper to trade at $6,120-6,170/mt today with the SHFE 1810 contract at 49,350-49,800 yuan/mt. Spot premiums are seen at 20-60 yuan/mt.

Aluminium: With strong resistance at the 40-day moving average, LME aluminium on Friday came off and closed at $2,078.5/mt after it hit a high of $2,117/mt. It is likely to continue to struggle among several moving averages and trade at $2,060-2,100 /mt today. The SHFE 1810 contract opened at the five-day moving average and rose to 14,775 yuan/mt. It then fell and closed at 14,685 yuan/mt as some longs covered their positions. The SHFE aluminium contracts saw open interest up 6,212 lots to 753,744 lots. We expect SHFE aluminium prices to strengthen in the medium term but a strong resistance is seen at 14,850 yuan/mt. We expect the SHFE 1810 contract to trade rangebound at 14,600-14,800 yuan/mt today with spot discounts narrower at 40-0 yuan/mt as the delivery date approaches.

Zinc: LME zinc fell below the lower Bollinger band and closed at $2,538/mt on Friday. We expect it to continue to trade under pressure today with a trading range of $2,510-2,560/mt. The SHFE 1810 contract opened lower on Friday night. With limited steam, the contract dropped and closed at 21,255 yuan/mt after it rose to 21,380 yuan/mt. The growing inventories across Shanghai, Tianjin and Guangdong are unlikely to provide support to SHFE zinc. We expect the SHFE 1810 contract to trade under pressure today with a trading range of 21,000-21,500 yuan/mt.

Nickel: As the dollar strengthened, LME nickel on Friday tumbled past the 20-day moving average to $13,625/mt before it recovered some losses and closed at $13,805/mt. The SHFE 1811 contract on Friday night opened lower, hovered at just above its daily moving average and closed at 113,210 yuan/mt. We expect LME nickel to hover around $13,800/mt today and the SHFE 1811 contract to trade at 112,500-113,500 yuan/mt. Spot prices are seen at 111,800-114,000 yuan/mt.

Lead: LME lead entered a downward trend as it registered the second consecutive day of decline last Friday night. Amid pessimism from macro developments, it is likely to test pressure at $2,100/mt today. The SHFE 1809 contract received support at the five-day moving average after hitting a low of 18,250 yuan/mt. It closed 0.11% lower last Friday night, and we see further downward room today.

Tin: LME tin traded with pressure last Friday night on a strengthened US dollar, and we expect the trend to continue in the short run. Support will be at $19,300/mt. The SHFE 1809 contract hovered weakly between the 20- and 40-day moving averages. With limited upward momentum, the contract is likely to face resistance at 147,000 yuan/mt today. Support is set at the 145,000 yuan/mt level.