SMM Morning Comments (Oct 12)

SHANGHAI, Oct 12 (SMM) –

Copper: LME copper rebounded to a high of $6,300/mt as the dollar fell poor data from the consumer price index (CPI). The SHFE 1811 contract also gained and tried to stand firmly above the 10-day moving average overnight with a shorter MACD red line. Shrinking inventories provided some support to copper prices while anticipated growth in Chinese infrastructure and upbeat orders for stockpiling before the year-end buoyed SHFE copper. LME copper is likely to trade at $6,150-6,280/mt today; the SHFE 1811 contract is expected to trade at 50,060-50,650 yuan/mt. Spot prices are seen between discounts of 30 yuan/mt to premiums of 30 yuan/mt.

Aluminium: While the SHFE 1812 contract closed higher than its opening price overnight, it traded rangebound in negative territory and ended at 14,260 yuan/mt. It is expected to trade at 14,150-14,300 yuan/mt today with spot discounts at 60-20 yuan/mt. LME aluminium fluctuated to a six-day losing streak and notched a new low in three weeks on Thursday. Its weekly KDJ lines expanded downwards but support remained at $2,000/mt. It is likely to trade at $2,010-2,050/mt today.

Zinc: While LME zinc nudged up on Thursday, its trading level edged down. The contract received some support from declines in LME inventories, but was under pressure from the five- and 10-day moving averages which adhered to each other. LME zinc is likely to hover at $2,585-2,635/mt today. The SHFE 1811 contract fell after it opened high in positive territory overnight. Pressure was at the upper Bollinger band. Spreads between the October and November contracts exceeded 1,100 yuan/mt. The SHFE 1811 contract is likely to trade rangebound at 22,350-22,850 yuan/mt today.

Nickel: LME nickel and the SHFE 1811 contract rebounded overnight as the US dollar weakened and the growth in US consumer price index for September missed expectations. LME nickel rallied to a high of $12,780/mt and settled at $12,705/mt, with LME stocks dipping 600 mt to 224,928 mt. The SHFE 1811 contract slid from a high of 105,150 yuan/mt to close at 104,700 yuan/mt. Fundamentals supported and grew both supply and demand. We forecast LME nickel hovering around $12,600/mt today, with the SHFE 1811 contract trading at 103,500-105,000 yuan/mt. Spot prices are set at 103,500-110,500 yuan/mt today.

Lead: LME lead sharply rebounded and gained more than 4% on Thursday after it multiple consecutive trading days of decline. It is likely to extend its gains today. Strong performance in LME lead pushed the SHFE 1811 contract to open higher overnight. But the SHFE contract fell to a low of 18,330 yuan/mt before it rebounded to a high of 18,540 yuan/mt. Longs and shorts diverged at the 18,500 yuan/mt level.

Tin: As longs added their positions, LME zinc moved out of its multiple-day trading range to a high of $19,340/mt before it pared some gains to end below $19,300/mt. The SHFE 1901 contract climbed to the 148,000 yuan/mt level overnight, tracking the strong performance of its LME counterpart. It is likely to struggle to break the resistance at that level today, with the next resistance at 149,000 yuan/mt.