SMM Morning Comments (Oct 17)

SHANGHAI, Oct 17 (SMM) –

Copper: On Tuesday, bargain-seekers pushed up LME copper to the daily moving average from early lows before a rally in US stocks rally that was fuelled by earnings and weighed on the dollar further bolstered LME copper to a high of $6,252.5/mt. The contract fell back to the daily moving average by close. The SHFE 1811 contract traded rangebound in negative territory overnight. China factory prices slowed in September, indicating a potential slowdown in profit growth across Chinese manufacturers in the fourth quarter amid the ongoing trade war with the US. This is set to weigh on copper prices. LME copper is likely to trade at $6,200-6,250/mt today with SHFE copper at 50,000-50,500 yuan/mt. In the physical market, sellers are keen to cash in under the pressure from cash flows and existing stocks while downstream consumers hold back from purchases. While sellers lowered offers, trades remain sluggish. Spot discounts are seen at 60-20 yuan/mt today.

Aluminium: As longs added and shorts covered their positions, the SHFE 1812 contract initially crept to a high of 14,335 yuan/mt before it hovered around 14,315 yuan/mt to end overnight trading. This helped it notch a two-day winning streak. Its KDJ lines expanded upwards and the MACD green line shortened. The contract is likely to trade at 14,250-14,360 yuan/mt today with spot discounts at 50-10 yuan/mt. LME aluminium fluctuated on Tuesday but tumbled to a low of $2,014/mt as LME inventories gained 70,775 mt, the greatest gain among nonferrous metals. It is expected to trade at $2,020-2,060/mt today.

Zinc: As risk aversion sentimement eased, LME zinc clawed back all early losses on Tuesday with its day lows standing below the 20-day moving average. While its short-term moving averages expanded downwards, zinc prices might receive some support from shrinking LME inventories. LME zinc is likely to inch up today with a trading range of $2,580-2,630/mt. The SHFE 1811 contract rebounded but failed to end in the black overnight. Pressure was at the 10-day moving average. The contract is expected to trade at 22,100-22,600 yuan/mt today.

Nickel: LME nickel fluctuated to close at $12,535/mt on Tuesday. It fell to a low of $12,400/mt and met pressure at the five-day moving average. While its trading level inched up, the SHFE 1901 contract traded in negative territory and ended at 102,790 yuan/mt overnight. LME nickel is expected to hover around $12,600/mt today and the SHFE 1901 contract is expected to trade at 102,500-104,000 yuan/mt with spot prices at 103,500-110,000 yuan/mt.

Lead: LME plummeted and lost all early gains by closing on Tuesday. As it temporarily stemmed its recent increases, it is likely to consolidate today. Following declines in its LME counterpart, the SHFE 1811 contract fell overnight and posted a two-day losing streak. This is set to erode the confidence among short-term longs. Market participants should monitor the five-day moving average in the near term.

Tin: LME tin edged up to close at $19,200/mt on Tuesday, with resistance at $19,300/mt. Improving market sentiment, reflected by rising stock markets, lent some support to tin prices. LME tin is likely to remain rangebound in the short term. As longs cut their positions, the SHFE 1901 contract came off to close at 147,640 yuan/mt overnight after it initially climbed near the 148,500 yuan/mt. It is likely to trade rangebound today with resistance at 149,000 yuan/mt.