SMM Morning Comments (May 15)

Published: May 15, 2018 09:47
SMM Morning Comments

SHANGHAI, May 15 (SMM) –

Copper: LME copper plummeted to a low of $6,850/mt last night as LME copper inventory grew 8,900 mt. This was the first increase in inventory after close to two weeks of decline. LME copper stood below the five-day moving average with significant pressure from several moving averages above. It is likely to trade at $6,850-6,900/mt today. The SHFE 1807 contract was dragged down by LME copper last night but still stood above the five-day moving average. The contract is expected to trade at 51,100-51,500 yuan/mt today. As today is the delivery date in the spot market, offers are likely to be lowered to boost transaction this morning. Offers are expected at a discount of 20 yuan/mt to a premium of 40 yuan/mt.

Aluminium: LME aluminium surged to a high of $2,325/mt last night with support from calm US-Sino trade tension. We expect it to hover at $2,290-2,330/mt today. The SHFE 1807 contract also gained in line with its LME counterpart with a high at 14,750 yuan/mt. The contract is expected to trade at 14,650-14,800 yuan/mt today with spot offers at a discount of 20 yuan/mt to a premium of 20 yuan/mt.

Zinc: LME zinc traded weaker than its SHFE equivalent while the US dollar index rebounded last night. LME zinc dipped across all moving averages and hit a low of $3,037/mt. We see it trading at $3025-3075/mt with resistance at the five- and 10-day moving averages today. The SHFE 1807 contract inched up last night but still faced pressure from several moving averages. Investors will be cautious about any potential impact from the surge of imported zinc in the spot market. The contract is expected to trade at 23,300-23,800 yuan/mt today.

Nickel: Market sentiment improved as downstream consumption for stainless steel rose in the high season and as both domestic and LME nickel inventories declined. LME traded robustly and we expect it to retain this performance during the day. SHFE 1807 also climbed up last night to a high of 107,830 yuan/mt. We see it trading at 106,200-108,200 yuan/mt with spot prices at 105,700-107,700 yuan/mt today. 

Tin: LME tin came off from an open high overnight and touched a low of $20,870/mt. It mostly traded around the five-day moving average. We expect it to remain rangebound today with support at the $20,600/mt level. The SHFE 1809 contract consolidated at low levels under pressure overnight. We expect the contract to trade at 145,000-146,500 yuan/mt today.

Lead: LME lead came off from a high of $2,402/mt overnight as longs took their profits and left the market. It rose for three consecutive days, up 4% over the past three trading days, with its five- and 10-day moving averages expanding upwards. We expect it to continue its upward trend in the short term with a smaller SHFE/LME ratio. It is likely to test pressure at the $2,400/mt level today. The SHFE 1806 contract opened high but fell overnight as longs took profits and left. Market participants should monitor SHFE lead coming off from highs as longs are keen to depart. We expect it to weaken today.

 


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