SMM Morning Comments (Mar 1)

SHANGHAI, Mar 1 (SMM) –

Copper: As longs took profits, the three-month LME copper came off from a session high of $6,529/mt, buoyed by gains in crude prices, to end lower at $6,481/mt on Thursday. The most traded SHFE April copper contract dropped in late trade overnight, paring earlier gains to close lower at 50,150 yuan/mt. The liquidation of long positions primarily accounted for overnight decline in SHFE copper. Overnight gains in the US dollar are expected to pressure copper prices today. LME copper is expected to trade at $6,460-6,510/mt with SHFE copper at 49,900-50,400 yuan/mt. Spot discounts are seen at 150-80 yuan/mt.

Aluminium: The three-month LME aluminium dropped close to 0.9% to finish Thursday at a session low of $1,905/mt, as gloomy February manufacturing data in China hampered market sentiment. Better-than-expected US economic growth in the fourth quarter bolstered the greenback overnight, which is set to weigh on LME aluminium today, with most transactions likely occurring at $1,890-1,920/mt today. The most active SHFE May aluminium contract dipped 0.2% to end at 13,665 yuan/mt overnight. Social inventories of primary aluminium in China continued their growth as consumption has yet to pick up. The SHFE 1905 contract is expected to trade at 13,610-13,710 yuan/mt today with spot discounts at 80-40 yuan/mt against the March contract.

Zinc: The three-month LME zinc climbed to a high of $2,785.5/mt on Thursday before the rebound in the US dollar dragged it to end at $2,759.5/mt. The contract gained 0.4% on the day. With low LME zinc inventories, LME zinc is expected to see limited downside room. The contract also faces pressure after the rally in the greenback. It is expected to trade rangebound at $2,730-2,780/mt today, with support at the five-day moving average. The most liquid SHFE April zinc contract opened higher and extended gains towards the 22,000 yuan/mt level overnight. The contract later lost some gains to finish overnight 0.5% higher at 21,910 yuan/mt. Gains in its LME counterpart bolstered SHFE zinc overnight, which still faces inventory pressure from the physical market as consumption has yet to significantly recover. The SHFE 1904 contract is expected to hover at 21,650-22,150 yuan/mt today.

Nickel: The three-month LME nickel pared earlier gains to close up marginally at $13,065/mt on Thursday. After a higher open, the most traded SHFE May nickel contract traded rangebound to finish overnight 0.7% higher at 102,860 yuan/mt. LME nickel is expected to trade rangebound at $12,900-13,200/mt today with SHFE nickel at 102,500-103,500 yuan/mt. Spot prices are seen at 103,000-103,500 yuan/mt.

Lead: The cancellation of LME lead warrants expanded further on Thursday, which bolstered the three-month LME lead to a seven-month high of $2,079.5/mt. The contract lost some of those gains to end at $2,139/mt as the US dollar index rose. LME lead is expected to consolidate in the near term as longs and shorts diverge at highs. Riding on its strong LME counterpart, the most active SHFE April lead contract opened higher and extended gains to end 1.5% higher at 17,555 yuan/mt overnight. SHFE lead is likely to weaken if its LME counterpart stages a downward correction.

Tin: The three-month LME tin rose to a session high of $21,775/mt on Thursday before it lost about half of those gains to end at $21,635/mt. With low LME tin inventories, LME tin is unlikely to fall below the $21,300/mt level in the short run. The most active SHFE May tin contract weakened overnight, after a higher open. It closed 0.2% higher at 150,810 yuan/mt. The contract now stands below the five-day moving average but above the 10-day moving average. Support is seen at the 150,000 yuan/mt level.