SMM Morning Comments (Mar 22)

SHANGHAI, Mar 22 (SMM) – 

Copper: LME copper stemmed four consecutive days of increase and lost gains accumulated this week, as it dipped to a low of $6,405/mt, before closed at $6,432.5/mt. Robust prices of crude oil will limit its downside room today. The SHFE 1905 contract hovered around the daily moving average with a high of 49,310 yuan/mt. Exiting shorts dragged it to a low of 48,920 yuan/mt near closing, and ended it at 49,060 yuan/mt. Open interests lost 3,974 lots to 608,000 lots. Today, we expect the contract to trade at 48,900-49,400 yuan/mt with LME copper at $6,425-6,470/mt. Lower prices of futures may encourage spot sellers to firm up premiums to 950-1200 yuan/mt today. 

Aluminium: LME aluminium fell below support from all moving averages, to a low of $1,896/mt, after the US dollar rebounded. It regained part of the losses as it rose above the five-day moving average and closed at $1,903.5/mt. As the K-indicator tested support from the 40-day moving average, and the MACD red line shortened, LME aluminium is expected to trade at $1,860-1,950/mt today. The SHFE 1905 contract lost support from longs and dropped to around the 40-day moving average. It is likely to trade at 13,500-13,800 yuan/mt today with spot premiums at 190-230 yuan/mt. 

Zinc: Record-low LME zinc inventories continued to buoy LME zinc, which rose to a high of $2,900/mt. However, pressure from a stronger US dollar saw it testing support from the $2,850/mt level, and closing at $2,835.5/mt. The SHFE 1905 contract underperformed its LME counterpart given weak fundamentals. It is likely to test support below and trade at 21,550-21,950 yuan/mt today. LME zinc is expected to trade at $2,820-2,865/mt today with support from the five-day moving average. 

Nickel: As the US dollar rallied, LME nickel failed to break pressure from $13,320/mt, and slid to the lowest overnight at $12,900/mt. It closed at $13,025/mt, with LME nickel inventories shrinking 1,242 mt to 187,116 mt. The SHFE 1905 contract received support from the 100,000 yuan/mt level and settled at 100,290 yuan/mt, after it fell to a low of 100,060 yuan/mt. The trading range today is set at 99,500-101,500 yuan/mt with LME nickel at $12,900-13,100/mt. Spot prices are seen at 103,000-104,000 yuan/mt. 

Lead: A higher US dollar dragged LME lead from a high of $2,074/mt, to the lowest overnight at $2,039/mt. Heavy pressure above is likely to keep it trading weakly, rangebound in the near term. The SHFE 1905 contract also dropped after increased to a high of 17,050 yuan/mt. It closed at the lowest overnight at 16,915 yuan/mt. The five-day moving average will continue to provide support today. 

Tin: Lower inventories of LME tin lifted prices to a high of $21,480/mt, above all moving averages. It is likely to remain robust and test resistance at $21,800/mt today. The SHFE 1905 contract hovered weakly around the 60-day moving average, pressured by sluggish downstream demand and domestic high inventories of spot products. It will face pressure from 148,800 yuan/mt with support at 146,500 yuan/mt today.