SMM Morning Comments (Mar 4)

SHANGHAI, Mar 4 (SMM) –

Copper: A higher US dollar lowered LME copper below the five-day moving average last Friday night, after it rose to a high of $6,536/mt. It closed at $6,442/mt with resistance at $6,480/mt. Open interests lost 4,709 lots to 293,000 lots. As longs exited, the SHFE 1904 contract also declined to a low of 50,110 yuan/mt, after it hovered around the daily moving average, or the 50,630 yuan/mt level. Today, copper prices are likely to receive a boost as the US and China are reportedly close to a trade agreement that would lift most of the sanctions imposed on Chinese goods last year. LME copper is expected to trade at $6,440-6,510/mt with its SHFE counterpart at 50,100-50,500 yuan/mt today. Spot prices are set at a discount of 100-40 yuan/mt, driven by downstream stockpiling. 

Aluminium: The SHFE 1905 contract traded rangebound around the five-day moving average with a high of 13,720 yuan/mt. It ended at 13,700 yuan/mt, with open interests down 1,138 lots to 328,540 lots. Recovery of downstream demand will determine aluminium prices in the short run. Today, prices are set at 13,640-13,750 yuan/mt. LME aluminium rebounded to a high of $1,918.5/mt after a higher US dollar lowered it to $1,898.5/mt. It is expected to trade at $1,900-1,930/mt today. 

Zinc: Fundamentals buoyed LME zinc to a high of $2,800/mt last Friday night, before a higher US dollar ended it at $2,777.5/mt. As LME zinc inventories shrank further, LME zinc expects to see limited downward room. Its trading range is set at $2,750-2,800/mt today. The SHFE 1904 contract followed the movement of its LME counterpart, and settled at 22,140 yuan/mt, with open interests down 3,762 lots to 222,000 lots. Current high inventories of refined zinc are likely to keep it at 21,950-22,400 yuan/mt today. 

Nickel: Improved macroeconomic sentiment lifted LME nickel to the highest last Friday night at $13,400/mt, though a robust US dollar depressed and settled it at $13,175/mt. The SHFE 1905 contract also fell after jumped to a high of 105,480 yuan/mt as shorts entered and the greenback strengthened. It closed at 104,290 yuan/mt, with support at 104,000 yuan/mt. Today, the contract is expected to trade at 104,000-105,500 yuan/mt, with LME nickel rising to $13,100-13,500/mt. Spot prices are seen at 104,000-105,500 yuan/mt today. 

Lead: Stronger SHFE contracts pulled LME lead to a high of $2,169.5/mt last Friday night, but pressure from the $2,100/mt level settled it at $2,137/mt. The SHFE 1904 contract moderated after initial gains and closed 0.34% higher at 17,675 yuan/mt. Trade optimism between China and the US is likely to keep prices at highs today. 

Tin: LME tin inventories continued to deplete and this supported prices above $21,300/mt. LME tin rebounded from a low of $21,555/mt, and closed at $21,645/mt last Friday night. The $21,300/mt level will continue to provide support today. The SHFE 1905 contract faced pressure from shorts, and dipped to a low of 150,310 yuan/mt before it settled at 150,460 yuan/mt. Support below is set at 150,000 yuan/mt today.