SMM Morning Comments (Sep 17)

SHANGHAI, Sep 17 (SMM) – 

Copper: LME copper faced resistance from the Bollinger middle band and closed at $5,905/mt as trade war concerns lingered. US President Donald Trump last week threatened duties on another $267 billion worth of Chinese goods on top of a $200 billion tariff list that awaits his decision. The SHFE 1811 contract also fell 380 yuan/mt to settle at 48,190 yuan/mt. Spot offers are likely at a premium of 70-120 yuan/mt over the SHFE 1810 contract today with reduced impact from imported copper. 

Aluminium: LME aluminium was dragged to $2,029.5/mt last Friday night as the US dollar grew on optimistic consumer sentiment data. It closed at $2,034/mt with open interests up 4,071 lot to 688,000 lots. As the US Treasury eased sanctiosn on Rusal, LME aluminium opened lower at $2,020/mt, and may trade weakly at $2,005-2,035/mt today. The SHFE 1811 contract is expected to face pressure from its weakened LME counterpart today. It may trade at 14,480-14,600 yuan/mt with spot offers at a discount of 10 yuan/mt to a premium of 30 yuan/mt. 

Zinc: Even as LME zinc inventory extended its decline, LME zinc fell below the five-day moving average as the US dollar gained. It is likely to trade at $2,290-2,340/mt today with continued pressure at the five-day moving average. The SHFE 1811 contract lost support at the Bollinger middle band as the depreciating Chinese yuan lowered the contract to a low around 20,460 yuan/mt. It may continue to trade weakly at 20,300-20,800 yuan/mt today. Investors should take more guidance from the movement of yuan today.

Nickel: A stronger US dollar depressed both LME nickel and the SHFE 1811 contract last Friday night. Limited upward momentum is expected in the contract in the short run as spot supplies grow faster than downstream demand. Large amounts of Norilsk nickel entered the domestic market last week as the import window opened. We expect LME nickel to hover around $12,500/mt today with the 1811 contract trading at 102,500-104,000 yuan/mt. Spot prices are set at 102,500-109,500 yuan/mt. 

Lead: LME tried to test pressure above but stopped rising at the $2,070/mt level given macroeconomic uncertainties. The SHFE 1810 contract settled lower last Friday night, but support from several moving averages above remained. It will see limited downward room as the SHFE 1809 contract is due for delivery today. 

Tin: LME tin consolidated around its five-day moving average and closed at $19,045/mt on Friday. Support is seen at $18,600/mt. The SHFE 1901 contract came off from early highs and settled at 144,370 yuan/mt on Friday night. Both longs and shorts aggressively cut their positions. We expect it to remain rangebound in the short term with support at 143,000 yuan/mt and resistance at 145,000 yuan/mt.