SMM Morning Comments (May 27)

SHANGHAI, May 27 (SMM) –

Copper: As downbeat economic data weighed on the US dollar, three-month LME copper rebounded to a high of $5,988/mt on Friday before it closed the trading day 0.35% higher at $5,962.5/mt. The most traded SHFE July contract hovered around the daily moving average on Friday night and closed 0.53% higher at 47,150 yuan/mt. Weak fundamentals and macroeconomic uncertainties are expected to extend support to the greenback. Copper prices are expected to remain under pressure today, with the closure of the British and US markets. SHFE copper is expected to trade between 46,900-47,400 yuan/mt today, with spot premiums of up to 70 yuan/mt. Poor trades after the completion of long-term contract deliveries and higher prices of futures will keep spot premiums in check.

Aluminium: As the US dollar extended its declines, three-month LME aluminium fluctuated to close Friday 0.33% higher at $1,802/mt. As shorts cut and longs added their positions, the most traded SHFE July contract rose to a high of 14,290 yuan/mt on Friday night before it ended 0.53% higher at 14,255 yuan/mt. SHFE aluminium is expected to climb to 14,290-14,350 yuan/mt today. Spot prices are seen at a premium of 10 yuan/mt to a discount of 10 yuan/mt.

Zinc: Three-month LME zinc came off from an intraday high of $2,577.5/mt before a decline in LME zinc inventories helped it rebound to close 1.15% higher at $2,555/mt on Friday. A weaker US dollar accounted for gains in LME zinc. Zinc stocks across LME-approved warehouses declined despite high premiums, which lowered the expectations for further deliveries to LME warehouses, and fuels steam in prices. The most active SHFE July contract fluctuated to close Friday night 0.62% higher at 20,325 yuan/mt. Despite a hit above the five-day moving average on Friday, SHFE zinc remained around the daily moving averages due to a lack of confidence in longs with expectations that social inventories of refined zinc across Shanghai, Tianjin and Guangdong will expand. The contract is expected to trade between 20,100-20,600 yuan/mt today.

Nickel: Nickel in London and Shanghai outperformed other base metals on Friday. LME nickel gained 4.12% on Friday, while its SHFE counterpart rose 3.2% on Friday night. The most traded SHFE July contract is expected to trade rangebound between 99,500-101,500 yuan/mt today, with spot prices at 99,500-103,000 yuan/mt.

Lead: As the US dollar further weakened, three-month LME lead climbed to an intraday high of $1,837.5/mt on Friday before it pared some gains to close 0.8% higher at $1,830/mt. Despite strong support from the $1,800/mt level, LME lead is expected to see limited upside amid macro uncertainties. The most active SHFE July contract initially rose to a high of 16,350 yuan/mt on Friday night before the loading up of short positions forced it to give up some gains to close 0.12% higher at 16,215 yuan/mt. With the five- and 10-day moving averages expanding upwards, SHFE lead is likely to further climb if consumption recovers as expected in the short and medium terms.

Tin: Three-month LME tin continued to trade rangebound at lows on Friday, closing 0.28% lower at $19,290/mt. Resistance is seen at $19,500/mt with support at $19,100/mt. The most traded SHFE September contract crept to 144,620 yuan/mt on Friday night before it traded in a tight range to end at 144,300 yuan/mt, up 0.2%. Support is seen at 143,500 yuan/mt.