SMM Morning Comments (May 17)

SHANGHAI, May 17 (SMM) – 

Copper: Improved macroeconomic sentiment and a surge in crude oil prices bolstered copper prices. LME copper found support from the five-day moving average, rising 0.07% to end at $6,081.5/mt after jumped to a high of $6,143/mt. The MACD green line shortened considerably. The SHFE July contract climbed to a high of 48,150 yuan/mt as shorts exited, finishing at 48,000 yuan/mt. It is expected to trade at 47,850-48,200 yuan/mt with support from the five- and 10- day moving averages today. LME copper may hover at $6,060-6,120/mt. Spot premiums are likely to stand firm at 20-100 yuan/mt today. 

Aluminium: Lower inventories of primary lead and rising prices of alumina on supply cuts continued to buoy prices of aluminium. LME aluminium gained 0.19% to settle at $1,855/mt, with the K-indicator expanding upwards to test the Bollinger upper band. Longs pulled the SHFE July contract to a high of 14,420 yuan/mt, before it finished at 14,385 yuan/mt. It is likely to trade at 14,300-14,400 yuan/mt with LME aluminium at $1,850-1,870/mt today. 

Zinc: A moderation in zinc inventories across LME warehouses keep LME zinc trading with support from the five-day moving average overnight. It climbed to a high of $2,646.5/mt before ended 0.04% higher at $2,632.5/mt. We see it testing pressure from the 10-day moving average and trading at $2,605-2,655/mt today. The most-traded SHFE July contract traded between the 10- and 20- day moving averages, with a high of 21,160 yuan/mt. Eased concerns about macroeconomic development will extend gains of the contract and keep it at 21,870-21,270 yuan/mt today.  

Nickel: LME nickel faced pressure from the 20-day moving average as it unsuccessfully tested the level and slid to close at $12,125/mt. With support from 98,000 yuan/mt, the SHFE 1907 contract rebounded after slipped to a low of 97,830 yuan/mt, ending 0.35% higher at 98,040 yuan/mt. It is likely to trade at 97,000-99,000 yuan/mt, with LME nickel at $12,000-12,200/mt today. Spot prices are set at 97,500-100,500 yuan/mt. 

Lead: LME lead traded robustly and climbed to a high of $1,849.5/mt, settling 0.8% higher on the day at $1,831.5/mt, the third consecutive trading day of increase. Pressure from the 10-day moving average is likely to cap its upside room today. The SHFE June contract slid after opened at highs, ending 0.65% higher at 16,215 yuan/mt. A decline in lead stocks will provide momentum in prices as the contract trading rangebound today. 

Tin: A higher US dollar and a buildup in LME tin inventories lowered prices of tin while most other base metals strengthened. LME tin lost 1.4% to close at $19,425/mt, and the SHFE September contract ended 0.36% lower at 145,760 yuan/mt. We expect the contract to find support at 145,000 yuan/mt with support for LME tin at $19,000/mt today.