SMM Morning Comments (Jun 4)

SHANGHAI, Jun 4 (SMM) –

Copper: Three-month LME copper rallied from five-month lows of $5,801/mt on Monday, closing 0.76% higher at $5,867.5/mt. A rebound in LME copper drove its SHFE counterpart to open higher overnight. The most traded SHFE July contract finished the overnight session 0.28% higher at 46,310 yuan/mt. A weaker US dollar prompted copper shorts to sell, which accounted for higher prices. Pressure from the five-day moving average is likely to limit upside room in LME and SHFE copper today, which are expected to trade rangebound. LME copper is expected to trade between $5,820-5,870/mt, with its SHFE counterpart at 46,100-46,600 yuan/mt. Spot premiums are seen firm at 60-140 yuan/mt. In the physical market, purchasing interest among buyers improved while eased cash flow issues at the start of the month drove sellers to hold offers firm. Tighter supplies available in the market are also likely to support spot premiums.

Aluminium: Three-month LME aluminium fell below the five- and 10-day moving averages to close the trading day 1.11% lower at $1,774/mt on Monday. The unwinding of long positions accounted for declines in LME aluminium on Monday. With support from the lower Bollinger band, LME aluminium is expected to trade between $1,765-1,820/mt today. As longs cut their positions, the most traded SHFE July contract fell to a low of 14,030 yuan/mt overnight before it ended 0.57% lower at 14,065 yuan/mt. With support from the 60-day moving average, SHFE aluminium is expected to trade rangebound between 14,000-14,200 yuan/mt today. Spot premiums are seen at 10-30 yuan/mt over the June contract.

Zinc: Three-month LME zinc fell to a low of $2,462.5/mt on Monday before it closed 2.02% lower at $2,474/mt. Fresh US tariff threats on Mexico and an already-poor global economy raised concerns about the consumption of zinc that is used in the production of auto components. This, together with an anticipated increase in supply, will limit upside in LME zinc, which is expected to trade weakly at $2,450-2,500/mt today. The most active SHFE July contract declined 1.46% to close at 20,255 yuan/mt overnight, with pressure from the five- and 10-day moving averages. Expectations of higher inventories and downwards expanding KDJ lines would not offer support to SHFE zinc, which is expected to trade weakly at 20,000-20,500 yuan/mt today.

Nickel: Three-month LME nickel clipped 0.92% to end at $11,880/mt on Monday. The most traded SHFE July contract shed 1.19% to close at 96,720 yuan/mt overnight. LME nickel is expected to trade between $11,800-12,000/mt today, with its SHFE counterpart at 96,100-97,000 yuan/mt. Spot prices are seen at 97,000-98,500 yuan/mt.

Lead: As the US dollar fell, three-month LME lead recovered from earlier losses to close 0.39% higher at $1,813.5/mt on Monday. LME lead is expected to remain rangebound in the short term. The most active SHFE July contract climbed to a high of 16,030 yuan/mt overnight before pressure from the 10-day moving average depressed it to end 0.09% weaker at 15,995 yuan/mt. SHFE lead has remained under pressure from the 20-day moving average since the middle of May and remains under pressure to break that level. 

Tin: Three-month LME tin sharply rose on Monday, rebounding to the five- and 10-day moving averages to close the trading day 2.32% higher at $19,180/mt. Support is seen at $18,500/mt while resistance is at $19,500/mt. The most traded SHFE September contract climbed 0.43% to end at 143,600 yuan/mt overnight, with resistance from the five-day moving average. Support is seen at 142,000 yuan/mt while resistance is at 144,500 yuan/mt.