SMM Morning Comments (Nov 29)

SHANGHAI, Nov 29 (SMM) – 

Copper: Copper led gains across base metals overnight, as the US dollar dipped from two-week highs after the US Federal Reserve described interest rates as "just below" the neutral rate. LME copper rebounded back above all moving averages, and above the Bollinger middle band. It closed at $6,251.5/mt after surged to a high of $6,269/mt. The SHFE copper dominant contract changed to the 1902 contract overnight, which rallied above the five- and 60-day moving averages on longs’ support. We expect it to trade at 49,200-49,600 yuan/mt with its LME counterpart trading at $6,180-6,230/mt today. Spot premiums are set at 70-130 yuan/mt. 

Aluminium: While rebounded base metals across the board buoyed prices of aluminium, domestic weak fundamentals are still likely to weigh on the SHFE 1901 contract in the short run. Poor consumption will expand any downward room in prices of alumina as raw materials. The SHFE 1901 contract is expected to trade at 13,600-13,750 yuan/mt today with its LME counterpart at $1,920-1,945/mt. Continued pressure is seen at the 10-day moving average on LME aluminium. In the spot market, discounts are set at 80-20 yuan/mt today. 

Zinc: Improved risk aversion in the market and a weaker US dollar grew LME zinc 1.94% to settle at $2,470/mt, after it rebounded to a high of $2,479/mt overnight. It is expected to test support at the current level and trade at $2,440-2,490/mt today. The SHFE 1901 contract received support at 20,000 yuan/mt, after shorts weighed it to a low of 20,030 yuan/mt. Current low-level social inventories will support the contract to trade at 20,000-20,450 yuan/mt today. 

Nickel: As a weaker US dollar grew confidence across longs, LME nickel broke pressure at $10,860/mt and rose to a high of $10,880/mt after hovering around the daily moving average overnight. The SHFE 1901 contract registered a slower growth, pressured by domestic slow consumption. It closed 0.09% higher on the day at 89,520 yuan/mt, with open interests up 4,120 lots to 275,000 lots. Today, we expect LME nickel to hover around $10,800/mt, with the 1901 contract trading at 89,500-90,000 yuan/mt. Spot prices are seen at 89,000-100,000 yuan/mt.

Lead: LME ceased its decline and climbed to a high of $1,943.5/mt as the US dollar dipped. It went up 1.18% to settle at $1,925/mt, but will continue to face much downward pressure today. The SHFE 1901 contract rebounded above all moving averages after dropped to a low of 18,135 yuan/mt. It closed at 18,265 yuan/mt and may consolidate at the current level today. 

Tin: LME tin is likely to extend its rebound in the short run, as it stopped declining and grew $155/mt on the day. It settled at $18,380/mt with the highest overnight at $18,430/mt. The SHFE 1901 contract consolidated at lows and also settled slightly higher. It is expected to rebound further today as longs enter the market.