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SMM Morning Comments (Feb 1)

2018-02-01

Copper: The US dollar is unlikely to fall further in the short term as the Federal Reserve Board implied an interest rate increase in March. The physical market remained weak as buyers were cautious ahead of Chinese New Year. We expect SHFE copper to trade at 52,500-53,000 yuan/mt today with spot discounts at 140-90 yuan/mt.

Aluminium: We see SHFE aluminium trade lower at 14,280-14,420 yuan/mt today with spot discounts at 130-90 yuan/mt, with weakening fundamentals. LME aluminium, on the other hand, is expected to trade at $2,195-2,220/mt.

Zinc: The upward momentum for zinc prices has become weaker amid a lack of stronger cues. However, the positive fundamentals remain. We expect LME zinc to trade at $3,495-3,545/mt today and SHFE zinc at 26,550-26,950 yuan/mt. The 0# common brand zinc is likely to trade at discounts of 90-60 yuan/mt against the 1802 contract, whereas the Shuangyan brand is seen at discounts of 50-20 yuan/mt.  

Nickel: The improving fundamentals for nickel remain as China’s manufacturing purchasing managers’index (PMI) has stayed above the 50-point mark for 18 months. We expect the SHFE 1805 contract to trade at 101,700-103,800 yuan/mt today with spot prices at 101,000-102,500 yuan/mt.

Tin: We see support at $21,600/mt for LME tin but also pressure at $22,000/mt, whereas the SHFE counterpart is set to trade at 149,000-151,000 yuan/mt today. Spot market is seen stable, too, with sellers reluctant to let go cargoes easily.

Lead: Spot lead is seen stable today at 19,400-19,500 yuan/mt with limited supply but weak restocking demand.

Source: SMM