SMM Morning Comments (May 3)

SHANGHAI, May 3 (SMM) –

Copper: As the US dollar index rebounded to a fresh high, LME copper traded rangebound overnight and SHFE copper’s trading range fell slightly. We expect LME copper to trade at $6,770-6,820/mt today with the SHFE 1806 contract at 50,800-51,200 yuan/mt. In the physical market, offers are stabilising as futures consolidate. Spot discounts are seen at 60-20 yuan/mt.

Aluminium: LME aluminium surged to a high of $2,330/mt at one point overnight but we see limited upward momentum, with no development in the Rusal sanctions. We expect it to trade at $2,280-2,330/mt today. Buoyed by its LME counterpart, the SHFE aluminium 1806 contract opened high at 14,540 yuan/mt and climbed up to 14,580 yuan/mt as longs added their positions. The contract closed above the 20-day moving average. With limited upward momentum, we expect it to test the support at the 20-day moving average today and trade at 14,400-14,600 yuan/mt. Spot discounts are seen at 70-30 yuan/mt.

Zinc: LME zinc fell and traded weakly overnight as the $3,100/mt level was tested. Its trading level continued to weaken and touched a low so far this year in the morning. We do not expect a rebound today and we see a trading range at $3,025-3,075/mt. SHFE zinc closed lower overnight with strong pressure and we expect it to consolidate at 23,450-23,850 yuan/mt today. The 0# common brands are likely to trade at premiums of 170-220 yuan/mt against the SHFE 1806 contract with Shuangyan at premiums of 180-240 yuan/mt.

Nickel: As China’s Caixin PMI beat market expectations, the ferrous complex surged and provided support to nickel. The SHFE 1807 contract hit a high of 105,560 yuan/mt but came off slightly towards closing. We expect LME nickel to continue its rangebound pattern at highs today with the SHFE 1807 contract at 103,000-105,000 yuan/mt. Spot prices are seen at 102,500-104,500 yuan/mt.

Lead: Due to a stronger US dollar, LME lead registered a third consecutive day of loss overnight and lost the support of $2,300/mt to hit this year’s low of $2,241/mt. The SHFE 1806 contract dipped at a slower rate than its LME counterpart but is likely to trade rangebound with downward room today.

Tin: LME tin traded rangebound with pressure overnight as the US dollar gained. SHFE tin mostly hovered between the 10- and 40-day moving averages. It is expected to stay in the rangebound trend and trade at 146,500-147,500 yuan/mt today.

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