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SMM Morning Comments (May 7)

iconMay 7, 2018 09:50
SMM Morning Comments


Copper: Copper prices were suppressed by stronger US dollar over the weekend. Technically, LME copper now stands at the $6,840/mt level with pressure from several moving averages, but the SHFE 1806 copper contract still stands below the moving averages with little support. We expect the SHFE 1806 contract to trade at 51,200-51,600 yuan/mt today. Spot prices are seen higher between discounts of 30 yuan/mt to premiums of 20 yuan/mt as the deliveries approach.

Aluminium: LME aluminium traded rangebound after hitting a high of $2,367.5/mt during the European trading hours. The SHFE 1807 contract hit a high of 14,745 yuan/mt last Friday night as longs added their positions following the rise of LME aluminium. Technically, its trading level expanded upwards along the 20-day moving average with support emerged as the 10- and 20-day moving averages moved towards each other. We see limited upward momentum for SHFE aluminium today without the buoyancy from its LME counterpart. We expect it to trade at 14,600-14,750 yuan/mt today with spot discounts at 70-30 yuan/mt.

Zinc: LME zinc tumbled to a low of $2,970/mt last Friday as no significant agreement was reached after the US-China trade negotiations. It then reversed all the losses and closed higher as the US nonfarm payrolls missed the expectations. We expect it to see bouts of volatility in the short term with the influence from the macro economic development. The SHFE 1807 contract also rose from lows and closed higher as longs entered the market and as shorts closed out their positions. We expect it to trade at 23,150-23,650 yuan/mt today. The 0# common brands are likely to trade at premiums of 180-230 yuan/mt over the SHFE 1806 contract with Shuangyan at premiums of 200-240 yuan/mt.

Nickel: With the recovery of risk appetite, LME nickel prices were firm during the night session but met resistance at the 20-day moving average. The SHFE 1807 contract rebounded from a low of 103,140 yuan/mt last Friday night, with trading level consolidating at the 104,550 yuan/mt level before close. We expect LME nickel to continue its rangebound pattern in the short term with SHFE 1807 contract trading at 103,100-105,100 yuan/mt today. Spot prices are seen at 102,600-104,900 yuan/mt.

Tin: LME tin dipped to a low of $21,075/mt last Friday night as the US dollar index gained on a promising economic prospect. LME tin traded rangebound with support at $21,000/mt and resistance at $21,300/mt. The SHFE 1809 tin contract rose following a fall with pressure at the 60-day moving average last Friday night. It is expected to trade at 147,000-148,000 yuan/mt today.

Lead: LME lead rebounded last Friday night as most base metals gained. It is likely to trade rangebound in the short term. The SHFE 1806 contract rose to a high of 18,725 yuan/mt as LME lead bounced and stood above all moving averages. We see it hovering at current level today.


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