SMM Morning Comments (May 23)

SHANGHAI, May 23 (SMM) – 

Copper: Copper prices rebounded as the US dollar weakened overnight. LME copper touched a high of $6,999/mt as the inventory shrank 2,752 mt following days of increase. It is likely to trade at $6,930-7,030/mt today with strong support while the SHFE 1807 contract is to trade at 51,800-52,200 yuan/mt. Adequate supplies are likely to widen spot discounts to 110-30 yuan/mt. 

Aluminium: LME aluminium lost upward momentum and dipped to a low of $2,256.5/mt overnight. As alumina prices continued to fall, LME aluminium is expected to weaken further and trade at $2,245-2,280/mt today. The SHFE 1807 contract inched down as downstream consumption from the domestic automobile industry was affected by the tariff cut for imported cars. The contract is expected to trade at 14,570-14,730 yuan/mt today with spot discounts at 90-50 yuan/mt.

Zinc: LME zinc traded rangebound overnight and dipped to a low of $3,040.5/mt after being buoyed by its SHFE counterpart, to a high of $3,075/mt. It is likely to retain its rangebound trend today and trade at $3,020-3,070/mt. The SHFE 1807 contract met stronger pressure from the five-, 10-, and 20-day moving averages due to sluggish downstream demand. We expect it to trade at 23,350-23,800 yuan/mt today. 

Nickel: LME nickel hovered around $14,760/mt last night following a surge as the US dollar came off. The SHFE 1807 contract inched up to a high of 109,360 yuan/mt overnight but then traded weakly around the daily moving average. We expect LME nickel to trade weakly today with the SHFE 1807 contract at 108,100-109,300 yuan/mt. Spot prices are seen at 107,600-108,800 yuan/mt.

Tin: LME tin fell to a low of $20,555/mt overnight as Indonesia restarted its tin exports and LME tin inventories expanded sharply from the previous day. We expect LME tin to continue to trade under pressure and test support at the $20,400/mt level today. We expect the SHFE 1809 contract to trade at 145,500-146,500 yuan/mt today.

Lead: Buoyed by longs, LME lead tested resistance at $2,480/mt twice and closed higher from Monday at $2465.5/mt overnight, touching a nearly two-month high. We expect the upward momentum to remain in the short term. The SHFE 1807 contract fell to a low of 19,665 yuan/mt with pressure from shorts after rising in line with LME lead. Investors should be wary of shorts again today.

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