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SMM Morning Comments (May 8)

iconMay 8, 2018 09:39
SMM Morning Comments


Copper: The strong US dollar suppressed copper prices overnight. The SHFE 1807 contract fell to a low of 51,220 yuan/mt from open at 51,630 yuan/mt and closed at 51,250 yuan/mt. SHFE copper now struggles among moving averages with support from the 40-day moving average. We expect the SHFE 1807 contract to trade at 51,150-51,600 yuan/mt today with LME copper at $6,820-6,860/mt. Spot prices are seen higher at premiums of 0-50 yuan/mt.

Aluminium: We expect LME aluminium to expand upwards along the 20-day moving average today with a trading range of $2,320-2,370/mt. The SHFE 1807 contract climbed to a high of 14,755 yuan/mt overnight as longs added their positions. It fell to a low of 14,695 yuan/mt as longs lost their confidence and took a watch-and-wait approach. We expect the contract to rangebound around the 20-day moving average and trade at 14,650-14,800 yuan/mt today. Spot discounts are seen at 70-30 yuan/mt.

Zinc: We expect LME zinc to rise today following its SHFE counterpart’s movement but with strong resistance at the $3,100/mt level. Its trading range is likely to be at $3,050-3,100/mt during the day. SHFE zinc failed to continue its strong performance overnight with pressure at the 10- and 20-day moving averages. With less positive fundamentals, we see limited upward room for it and expect it to trade at 23,500-23,950 yuan/mt today. The 0# common brands are likely to trade at premiums of 130-180 yuan/mt over the SHFE 1806 contract with Shuangyan at premiums of 160-210 yuan/mt.

Nickel: Suppressed by the strong US dollar, the SHFE 1807 contract fell and consolidated at low levels overnight. However, we see support from the high international oil prices. We expect LME nickel to continue its rangebound pattern today with SHFE 1807 contract at 103,400-105,000 yuan/mt. Spot prices are seen at 102,900-104,500 yuan/mt.

Lead: After hitting a high of 18,920 yuan/mt overnight, the SHFE 1806 contract met pressure at 18,850-19,050 yuan/mt as investors cut their positions. It is likely to fall today given the capital outflow of 100 million yuan the previous day.

Tin: Given the strong US dollar, we see LME tin trading rangebound under pressure today with resistance at $21,400/mt and support at $21,000/mt. We also expect SHFE tin to move under pressure in a trading range of 146,000-147,500 yuan/mt.


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