SMM Morning Comments (Jul 15)

SHANGHAI, Jul 15 (SMM) – 

Copper: A lower US dollar and more-than-expected domestic social financing for June buoyed copper prices, as three-month LME copper rallied above the $6,000/mt level and ended up 0.4%, with the most-active SHFE September contract rebounding from a low of 46,530 yuan/mt, closing 0.2% higher at 46,740 yuan/mt. Stable prices of crude oil also underpinned copper prices. With support from the 10-day moving average and lengthening MACD red line, the SHFE September contract is likely to trade between 46,400-46,800 yuan/mt, with its LME counterpart at $5,930-5,980/mt today. Spot premiums are seen at highs of 50-130 yuan/mt as sellers keep offers firm on the delivery day for the SHFE July contract. 

Aluminium: As the US dollar continued to weaken, three-month LME aluminium rebounded from below all moving averages to a high of $1,829/mt, before it ended 0.38% higher at $1,828/mt. The most-active SHFE August contract also closed 0.29% higher at 13,790 yuan/mt, after rose to a high of 13,805 yuan/mt. Trading range today is expected at 13,700-13,850 yuan/mt, with LME aluminium at $1,800-1,850/mt. 

Zinc: Three-month LME zinc climbed and tested pressure from the 10-day moving average twice after the US dollar slid. It closed 1.84% higher at $2,437/mt, with LME zinc inventories extending their declines. This saw the contango structure flipping to backwardation last Friday night. The KDJ indicators expanded upwards, indicating continued upward momentum in prices. The most-liquid SHFE September contract shrugged off resistance from the 10-day moving average as shorts exited, ending up 1.23% at 19,280 yuan/mt. As the KDJ indicators moved upwards, the contract is expected to trade between 19,000-19,500 yuan/mt, with LME zinc at $2,400-2,450/mt today. 

Nickel: Three-month LME nickel broke pressure from $13,300/mt after LME nickel stocks shrank 2,772 mt to 150,840 mt. It continued to rise to a four-month high of $13,590/mt as the US dollar dipped, and closed 3.47% higher at $13,575/mt. The most-traded SHFE September contract also traded robustly as it broke resistance from 104,000 yuan/mt and 105,000 yuan/mt, to a high of 105,550 yuan/mt before ended 1.59% higher at 105,490 yuan/mt. It is expected to trade above the Bollinger upper band and test the 105,800 yuan/mt level with limited pressure above, and LME nickel is likely to test pressure from $13,800/mt today. 

Lead: Three-month LME lead closed higher for the fifth consecutive trading day as it climbed 0.69% to finish at $1,978/mt last Friday night. The most-traded SHFE August contract rose along with its LME counterpart and expanded 0.16% to end at 16,105 yuan/mt. Limitedly changed fundamentals may cap any upward room in lead prices today. 

Tin: While a lower US dollar lifted most other base metals, both three-month LME tin and the most-liquid SHFE September contract extended rangebound trend and settled lower last Friday night. With pressure from the five- and 10- day moving averages, LME tin is expected to trade with support from $18,000/mt today, with SHFE 1909 tin trading with support from 132,500 yuan/mt and resistance from 135,000 yuan/mt today.