SMM Morning Comments (May 28)

Published: May 28, 2018 09:51

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SMM Morning Comments

SHANGHAI, May 28 (SMM) –

Copper: LME copper dipped below the daily moving average to a low of $6,840/mt last Friday night as the US dollar gained. It is likely to dip on a stronger US dollar as an US-North Korea meeting is likely to be held as scheduled. The SHFE 1807 contract also fell last Friday with pressure from the 60-day moving average. It is expected to trade at 51,250-51,600 yuan/mt today with spot discounts at 110-30 yuan/mt.

Aluminium: LME aluminium was depressed by a rising US dollar index last Friday, and tumbled to a low of $2,248/mt. It closed over 1% lower from the previous trading day at $2,266.5/mt. This dragged the SHFE 1807 contract down to close at 14,760 yuan/mt. The contract, however, is likely to receive support from declining domestic inventory that would be released today. It is expected to trade at 14,700-14,900 yuan/mt with spot discounts at 90-50 yuan/mt.

Zinc: LME zinc closed 0.51% higher last Friday night but pressure remained. A stronger US dollar is likely to limit upward room in LME zinc, with pressure at 10-day moving average. Support is seen at $3,000/mt in the short run. The SHFE 1807 contract also inched up with support at the 10- and 20-day moving averages. However, it is hard to gain further with resistance at the 40-day moving average and 24,000 yuan/mt. It is expected to hover at 23,500-23,950 yuan/mt today.

Nickel: LME nickel tumbled to a low of $14,675/mt last Friday night but regained some losses with the support from several moving averages. The SHFE 1807 contract also initially fell to a low of 109,020 yuan/mt last Friday night. It then rebounded a little with support from the 10-day moving average. Its trading level hovered around the daily moving average. Given the strong US dollar and the shrinking LME and domestic nickel inventories, we expect LME nickel to trade strongly rangebound today with SHFE 1807 at 108,500-110,000 yuan/mt. Spot prices are seen at 108,000-109,500 yuan/mt.

Lead: LME lead fell below the five-day moving average last Friday night with pressure from shorts. It is likely to test support at the 10-day moving average with limited momentum in the short term. The SHFE 1807 contract was dragged down by its LME counterpart to a low of 19,635 yuan/mt. Lacking support from longs, it is likely to dip further today with pressure in the short term.

Tin: LME tin continued to fall last Friday and touched a low of $19,985/mt as the US dollar rose and as Indonesia recovered its tin exports. The SHFE 1809 contract rebounded a little last Friday night as some longs entered the market. Given its weak LME counterpart and oversupply in the spot market, we expect SHFE tin to remain under pressure in the short term with support at the 145,500 yuan/mt level and resistance at the 147,500 yuan/mt level.

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