SMM Morning Comments (May 22)

Published: May 22, 2018 09:37
SMM Morning Comments

SHANGHAI, May 22 (SMM) – 

Copper: LME copper stuck between all moving averages with support at the 40-day moving average overnight. It rebounded and closed higher at $6,898/mt after it dipped twice as the US dollar gained and LME copper inventory registered a fourth consecutive day of gain of 1,425 mt. We see it rising to $6,870-6,930/mt today as pressure from shorts let up. The SHFE 1807 contract also rose to stand at the 20-day moving average with resistance at the 60-day average. We expect it to trade at 51,400-51,800 yuan/mt with higher spot offers, at a discount of 70 yuan/mt to a premium of 10 yuan/mt. 

Aluminium: As oil prices strengthened on concerns of Venezuela's supply, LME aluminium traded with momentum overnight and tested pressure at $2,300/mt. It is likely to trade at $2,360-2,300/mt today. The SHFE 1807 contract mostly hovered around the daily moving average last night with open interests that declined 1,244 lots to 661,092 lots. Investors will monitor any impact on prices from the domestic declining aluminium inventory. The contract is expected to trade at 14,690-14,850 yuan/mt today with spot discounts at 100-60 yuan/mt. 

Zinc: LME zinc broke pressure at the 20-day moving average and climbed to a high of $3,122/mt as US-Sino trade concerns abated. It received support at the five- and 10-day moving averages. It is likely to stand above $3,100/mt with trading range at $3,080-3,130/mt today. The SHFE 1807 contract fell after it touched a high of 23,985 yuan/mt with pressure from the 40-day moving average and 24,000 yuan/mt. However, we expect it to rise and test pressure above today due to positive fundamentals. It is likely to trade at 23,800-24,200 yuan/mt. 

Nickel: The market was bolstered by the news that the US and China agreed to put the trade war “on hold”. The US dollar remained at high levels. LME nickel traded strongly rangebound overnight. The SHFE 1807 contract consolidated below the daily moving average after it hit a high of 109,720 yuan/mt. We expect LME nickel to continue its strongly rangebound pattern with the SHFE 1807 contract at 108,500-110,000 yuan/mt today. Spot prices are seen at 108,000-109,500 yuan/mt today.

Tin: LME tin’s trading level nudged up overnight but remained under pressure from several moving averages. We expect it to continue its rangebound pattern in the short term with support at the $20,600/mt level. The SHFE 1809 contract traded at high levels overnight and hit the 40-day moving average at one point while some longs entered the market. We expect it to continue to climb up in the short term with resistance at the 147,000 yuan/mt level. It is likely to trade at 145,500-146,500 yuan/mt today.

Lead: LME lead soared above $2,400/mt to close at $2,415/mt overnight amid optimistic sentiment in the market. It stood above all moving averages last night. We see it testing support at $2,400/mt today. The SHFE 1807 contract received support from a stronger LME lead and climbed up to close at 19,670 yuan/mt, with trading liquidity overnight exceeding that of the previous day. The contract is expected to continue its strong performance today. 

 


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