SMM Morning Comments (Nov 9)

SHANGHAI, Nov 9 (SMM) – 

Copper: LME copper rose to $6,124.5/mt overnight as the market refocused from the US midterm election results to the declines in LME copper inventories. Pressure from the daily moving average weighed it to a low of $6,092.5/mt. It settled at $6,144/mt, after hovering around $6,140/mt near closing. The SHFE 1910 contract rebounded after it dipped, with the lowest level below the 60-day moving average. We expect it to trade at 49,100-49,600 yuan/mt today with its LME counterpart trading at $6,100-6,150/mt. Spot premiums are set at 40-80 yuan/mt as sellers are keen to destock.

Aluminium: The SHFE 1901 contract mostly consolidated within a narrow range above the Bollinger upper band overnight, and nudged up to settle at 13,955 yuan/mt. LME aluminium was pressured by a strong US dollar as the Federal Reserve announced that it will maintain its monetary policy and indicated further gradual rate hikes before the end of the year. It slumped from a high of $2,002/mt to the lowest overnight at $1,981/mt. As weak support is expected at the five- and 10-day moving averages below, LME aluminium may trade at $1,960-2,000/mt today. The SHFE 1901 contract is expected to trade at 13,900-14,000 yuan/mt today, with spot discounts at 60-20 yuan/mt. 

Zinc: Short-term tight supplies of zinc pulled up LME zinc from lows around $2,465/mt overnight, even as the US dollar rebounded. It grew 1.12% from Wednesday to close at $2,492.5/mt, and may trade at $2,470-2,520/mt today. The SHFE 1901 contract regained upward momentum last night with support from the Bollinger lower band. It rose in line with its LME counterpart and settled at 20,925 yuan/mt. It is likely at 20,600-21,100 yuan/mt today. 

Nickel: LME nickel rallied overnight from a low of $11,590/mt, but met resistance at $11,815/mt. It inched down to around the 10-day moving average, and closed at $11,765/mt. The SHFE 1901 contract tested pressure at the 97,580 yuan/mt level amid cautious longs, and grew 0.79% from Wednesday to close at 97,460 yuan/mt. Today, the contract is likely to trade at 96,500-98,000 yuan/mt with LME nickel hovering around $11,750/mt. Spot prices are seen at 97,500-106,500 yuan/mt. 

Lead: Release of domestic environmental review results in Anhui province bolstered prices of lead last night, but the rises are unlikely to sustain. LME lead surged above the five- , 10-, and 20-day moving averages amid rising longs. The SHFE 1812 contract stood above all moving averages after opened at highs, and settled at 18,750 yuan/mt. Prices are expected to consolidate at their current levels today. 

Tin: Potential maintenance at Yunnan Tin buoyed prices of the SHFE 1901 contract to a high of 148,500 yuan/mt overnight. LME tin also traded robustly and closed 1.42% higher from Wednesday. The 1901 contract is likely to test pressure above at 149,000 yuan/mt, with spot prices expected at 147,000-149,000 yuan/mt today.