SMM Morning Comments (May 10)

SHANGHAI, May 10 (SMM) –

Copper: LME copper rebounded to a high of $6,810/mt from a low of $6,766/mt during the European trading session overnight. The SHFE 1807 contract traded rangebound overnight. Its trading level nudged up and hit the five-day moving average. We expect LME copper to trade at $6,800-6,850/mt today with SHFE 1807 contract at 50,900-51,300 yuan/mt. Spot premiums are seen to be offered lower at 30-90 yuan/mt as futures prices rose.

Aluminium: LME aluminium surged to a high of $2,370/mt from a low around $2,280/mt overnight. We expect it to test support at the five- and 20-day moving averages and trade at $2,320-2,370/mt today. The SHFE 1807 contract climbed up to a high of 14,670 yuan/mt and hit the five-day moving average overnight as longs entered the market. It then traded rangebound within a narrow range as shorts also entered the market. We expect it to trade weakly, rangebound at 14,500-14,700 yuan/mt today with spot discounts at 40-0 yuan/mt.

Zinc: LME zinc significantly fluctuated overnight and struggled to hit the $3,100/mt level. We see it difficult to stand firmly above the $3,100/mt level and expect it to trade at $3,065-3,115/mt today. We expect the SHFE 1807 contract to trade at 23,500-24,000 yuan/mt today under pressure from thin spot trading in Shanghai, Guangdong and Tianjin as well as the growing inflow of zinc imports. The 0# common brands are likely to trade at premiums of 60-100 yuan/mt over the SHFE 1806 contract with Shuangyan at premiums of 80-120 yuan/mt.

Nickel: LME nickel struggled among several moving averages and is expected to continue to consolidate today. The SHFE 1807 contract came off from a high of 104,670 yuan/mt and then consolidated around the daily moving average overnight. We expect the contract to trade at 103,400-105,000 yuan/mt with spot prices at 102,900-104,500 yuan/mt.

Lead: LME lead rose in line with its SHFE counterpart during the Asian trading period overnight, but slumped from highs when it entered the European trading session. It stayed close to the five-day moving average with pressure above. We expect it to continue the weak trading trend in the short term. The SHFE lead 1806 contract hovered at highs for three consecutive days. However, the contract is likely to turn in the following few days, under pressure.

Tin: LME tin came off a little from a high of $21,325/mt during the late European trading session. We see resistance at the 60-day moving average. The SHFE tin 1809 contract traded at lows overnight. Longs entered the market at low levels and this supported tin prices. We expect it to trade at 145,000-147,000 yuan/mt today. Spot prices are seen stable at 143,500-145,500 yuan/mt.

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