SMM Morning Comments (May 3)

Published: May 3, 2018 09:48

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SMM Morning Comments

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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copper aluminium nickel zinc lead tin

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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