SMM Morning Comments (May 29)

Published: May 29, 2018 09:41

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SMM Morning Comments

SHANGHAI, May 29 (SMM) –

Copper: The SHFE 1807 contract mostly hovered above the daily moving average at 51,200 yuan/mt last night but jumped to a high of 51,470 yuan/mt near closing as investors cut their shorts. It closed slightly lower from last Friday night with pressure from a stronger US dollar. We see it trading at 51,300-51,650 yuan/mt today with support at 51,300 yuan/mt. LME copper is expected to trade at $6,820-6,880/mt today. In the spot market, discounts are expected at 100-30 yuan/mt as sellers are keen to destock.

Aluminium: LME aluminium is expected to trade rangebound at $2,260-3,000/mt today. The SHFE 1807 contract halted its increase at 14,815 yuan/mt last night with limited support from longs. We see limited upward room as the commissioning of aluminium production capacity accelerated while costs declined. The contract is expected to trade at 14,650-14,850 yuan/mt today with spot discounts of 90-50 yuan/mt.

Zinc: The SHFE 1807 contract met pressure at the 40-day moving average overnight and dipped below the daily moving average to close at 23,850 yuan/mt. However, it is expected to receive support from the declining domestic zinc inventory. We see it trading at 23,700-24,100 yuan/mt today with pressure at 24,000 yuan/mt.

Nickel: Support was seen at the five-day moving average for the SHFE 1807 contract overnight. It hovered above the daily moving average before closed 0.67% higher at 110,590 yuan/mt. Though the US dollar strengthened, declining nickel inventories across the LME and domestic warehouses, and production restrictiona on environmental ground will provide support to nickel prices. LME nickel is expected to hover at high levels today with the SHFE 1807 contract at 109,600-111,000 yuan/mt. Spot prices are seen at 109,100-110,500 yuan/mt.

Lead: The SHFE 1807 contract weakened last night with pressure from shorts. It dipped twice to close 0.13% lower at 19,775 yuan/mt. We expect it to trade rangebound in the short term and to hover at the five-day moving average today.

Tin: The SHFE 1809 contract extended its gains last night as investors continued to add their positions. We expect it to test resistance at the 152,000 yuan/mt level today. The contract is also set to support LME tin today but with resistance at $20,650/mt.

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