SMM Morning Comments (Jun 4)

Published: Jun 4, 2018 09:47

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SMM Morning Comments

SHANGHAI, Jun 4 (SMM) –

Copper: The SHFE 1807 contract rose above the daily moving average after it fell to a low of 51,490 yuan/mt last Friday night. Technically, LME copper now struggles among several moving averages. We see some upward momentum for it as its KDJ indicator expands upwards. The SHFE 1807 contract now stands firmly above the 51,500 yuan/mt level. We expect LME copper to trade at $6,880-6,940/mt today with SHFE 1807 contract at 51,500-52,000 yuan/mt. Spot premiums are seen at 0-40 yuan/mt.

Aluminium: LME aluminium regained some losses last Friday night with support from several moving averages. We expect it to try to stand firmly above the $2,300/mt level today with a trading range of $2,280-2,315/mt. As its LME counterpart stablised, the SHFE 1807 contract rebounded to the 14,640 yuan/mt level after it fell to a low of 14,585 yuan/mt last Friday night. We expect it to trade at 14,580-14,750 yuan/mt today with spot discounts at 60-20 yuan/mt.

Zinc: LME zinc fell and broke the $3,100/mt level last Friday with strong resistance at the 40-day moving average. We expect it to trade at $3,070-3,110/mt today given the anticipated increase in LME zinc inventory. While the SHFE 1807 contract stood firmly above the 60-day moving average last Friday, it failed to break the upper Bollinger band and edged down due to its weak LME counterpart. The SHFE 1807 contract is likely to extend its decline and lose the support at the 60-day moving average today if its LME counterpart continues to weaken. It is seen trading at 23,950-24,400 yuan/mt today.

Nickel: LME nickel received support at several moving averages after it dipped to a low of $15,105/mt last Friday night. It closed at $15,410/mt with open interests increasing 4,120 lots to 11,205 lots. Despite a cut in long positions, the SHFE 1807 contract mostly hovered at the daily moving average last Friday night as nickel inventory shrank across the LME and domestic warehouses and as downstream demand of stainless steel was high. We expect LME nickel to consolidate at highs with the SHFE 1807 contract trading at 115,400-117,000 yuan/mt today. Spot prices are seen at 114,900-116,500 yuan/mt.

Lead: Last Friday night, LME lead regained all the losses made during the day before closure as the US dollar fell. It now stands above the five- and 10-day moving averages with its upward trend unchanged. We expect it to trade rangebound today. As its LME counterpart rebounded, the SHFE 1807 contract also rose back to the daily moving average last Friday night after touching a low of 19,760 yuan/mt. While the SHFE 1807 contract remained at highs, we see bearish sentiment emerging as pressure from shorts grew and as the contract fell for several times. We expect the contract to weaken today.

Tin: With support of SHFE tin contracts, LME tin inched up last Friday night but failed to break the resistance at 20-day moving average. It is expected to strengthen with pressure at $21,000/mt in the short term. SHFE 1809 contract also met resistance above and fell below the daily moving average at closing last Friday night. It is seen trading rangebound today with support at 151,000 yuan/mt and pressure at 157,500 yuan/mt.

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Morning comments copper aluminium zinc lead nickel tin

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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