SMM Morning Comments (May 24)

SHANGHAI, May 24 (SMM) – 

Copper: Prices of copper weakened last night as US President Donald Trump's remarks grew US-Sino trade uncertainties. LME copper lost the gains that it made during the past three days and fell back to all moving averages. The SHFE 1807 contact also fell to the 10-day moving average. We expect LME copper to trade at $6,800-6,880/mt today with the SHFE contract at 51,200-51,700 yuan/mt. Spot discounts are seen narrower at 100-20 yuan/mt. 

Aluminium: LME aluminium fell below the 40-day moving average to a low of $2,239/mt last night as the US dollar gained. It then rebounded above the five-day moving average and registered a high of $2,277/mt. Its overall trading range has moved downwards this week. We see it trading at $2,245-2,275/mt today. The SHFE 1807 contract tracked the movements of LME aluminium last night and tested support at the 40-day moving average. It is likely to rise on a potential decline in domestic aluminium inventories today. The contract is expected to trade at 14,550-14,700 yuan/mt with spot discounts at 90-50 yuan/mt. 

Zinc: LME zinc faced pressure from the five-, 10-, and 20-day moving averages above, with support at $3,000/mt. As a strong US dollar continued to weigh on base metals, LME zinc is likely to trade rangebound during the day at $3,000-3,050/mt. The SHFE 1807 contract weakened overnight with significant pressure at several moving averages. It is likely to test resistance at 23,500 yuan/mt and to trade at 23,250-23,650 yuan/mt today. 

Nickel: As the dollar gained, LME nickel hovered around the daily moving average overnight. Suppressed by the strong US dollar, the SHFE 1807 contract tumbled to a low of 107,420 yuan/mt. It then regained some losses with support at the 20-day moving average. Its trading level hovered around the 107,800 yuan/mt level. We expect LME nickel to continue its weak and rangebound pattern today with the SHFE 1807 contract trading at 107,150-108,500 yuan/mt. Spot prices are seen at 106,650-108,000 yuan/mt.

Tin: LME tin fell to a session-low of $20,525/mt overnight. The recovery of Indonesia's tin exports drove up LME tin inventories but weighed on LME tin prices. We expect LME tin to remain under pressure with support at the $20,400/mt level. The SHFE 1809 contract traded at high levels overnight but failed to expand its gains due to its weak LME counterpart. We expect it to trade at 146,500-147,500 yuan/mt today.

Lead: LME lead retained its trading momentum last night, and is likely to see upward room in the following few days. Buoyed by longs, the SHFE 1807 contract rose with its open interest up 6,330 lots last night. Investors should be cautious of a rise in shorts that could depress the contract at highs today. 

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