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SMM Morning Comments (May 25)
May 25,2018 10:03CST
price review forecast
SMM Morning Comments

SHANGHAI, May 25 (SMM) – 

Copper: Copper prices gained last night as the US dollar index weakened. Struggling between several moving averages, LME copper is expected to move above them and trade at $6,860-6,920/mt today with support from longs. The SHFE 1807 contract hovered between the five- and 60-day moving averages last night with support from the 20-day moving average. It is likely to trade rangebound with upward room at 51,300-51,800 yuan/mt. Spot discounts are expected at 100-30 yuan/mt. 

Aluminium: LME aluminium climbed up and touched a high of $2,293.5/mt as most base metals gained last night. We see it facing pressure today at $2,250-2,290/mt as Russian oligarch Oleg Deripaska resigned. The SHFE 1807 contract rose slower from the previous days on declining domestic inventory. It is expected to trade at 14,700-14,850 yuan/mt today with spot discounts at 100-60 yuan/mt. 

Zinc: LME zinc closed slightly higher overnight but faced continuous pressure from the five-, 10-, and 20-day moving averages. We see it hovering at $3,010-3,055/mt today. The SHFE 1807 contract traded firmly last night and rose across the daily moving average to a high of 23,570 yuan/mt. However, as downstream consumption lacks momentum, the contract is expected to trade rangebound at 23,250-23,650 yuan/mt today. 

Nickel: LME nickel surged to a high of $14,685/mt overnight as the US dollar came off from highs. The SHFE 1807 contract registered a three-year high of 110,640 yuan/mt overnight as its strong LME counterpart drove longs to add their positions. As LME and domestic nickel inventories decline, we expect LME nickel to trade strongly rangebound today with the SHFE 1807 contract at 108,400-110,000 yuan/mt. Spot prices are seen at 107,900-109,500 yuan/mt.

Tin: LME tin fell sharply to a low of $20,260/mt overnight in anticipation of growing tin supplies as Indonesia resumed its tin exports. We expect it to test support at the 60-day moving average today. Given its weak LME counterpart, the SHFE 1809 contract failed to extend its daytime gains last night and traded weakly rangebound. We see limited upward room for SHFE tin with resistance at the 148,500 yuan/mt level amid bearish sentiment. We expect SHFE tin to trade rangebound today.

Lead: LME lead continued its strong trading pattern last night. It rose close to a three-month high at $2,494 buoyed by strengthened SHFE lead. We see it testing resistance at $2,500/mt today. SHFE 1807 contract jumped to a high of 20,165 yuan/mt with investors’ enthusiasm to add long positions. It rebounded to close at 20,160 yuan/mt after dipping temporarily below the daily moving average. The contract was in an accelerating phase recently.


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