SMM Morning Comments (Jun 5)

Published: Jun 5, 2018 09:39

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SMM Morning Comments

SHANGHAI, Jun 5 (SMM) –

Copper: Copper prices rose overnight as the US dollar weakened. Labour negotiations at BHP’s Escondida copper mine in Chile, the world’s largest copper mine, which began last week are also likely to weigh on supply. In light to the shutdown of the second largest copper smelter in India, SMM remains bullish on copper prices in the short term due to the expected supply shortage. We expect LME copper to trade at $6,950-7,000/mt today with SHFE 1807 contract at 51,800-52,300 yuan/mt. As prices of futures climbed, spot prices are seen lower at discounts of 20 yuan/mt to premiums of 40 yuan/mt.

Aluminium: LME aluminium came off a high overnight after it rose to a high of $2,343/mt as the US dollar rebounded. As its trading level expands upwards, we expect it to continue to rise today with a trading range at $2,300-2,340/mt. The SHFE 1807 contract fell overnight as support was limited and as shorts entered the market at highs. The SHFE aluminium index and 1807 contract both saw increases in open interest overnight. We expect the contract to trade at 14,550-14,750 yuan/mt today with spot discounts at 60-20 yuan/mt.

Zinc: LME zinc failed to break resistance at the 40-day moving average and consolidated at $3,112-3,121/mt overnight. With firm support from the 10- and 20-day moving averages, we expect LME zinc to rise to test the 40-day moving average today with a trading range at $3,080-3,130/mt. The SHFE 1807 contract hit a high of 24,260 yuan/mt overnight after it fell to a low of 24,020 yuan/mt. We expect it to hover around the 60-day moving average today with a trading range at 24,000-24,450 yuan/mt.

Nickel: As the US dollar weakened, LME nickel rebounded to above the daily moving average during the European trading session after it fell to a low $15,280/mt. It closed at $15,500/mt with LME nickel inventory down 894 mt to 286,752 mt. The SHFE 1807 contract also strengthened on a weaker US dollar and mostly traded above the daily moving average. We see it trading at 115,600-117,300 yuan/mt today with its LME counterpart hovering at highs. Spot prices are seen at 115,100-116,800 yuan/mt.

Lead: LME lead returned to an upward track and registered a high of $2,510/mt overnight after it fell to a low of $2,431/mt. We expect it to struggle around the $2,500/mt level today given strong pressure at that level. The SHFE 1807 contract broke rangebound trading and rose overnight. Longs dominated the market. Bullish sentiment is likely to prevail if the contract manages to stand firmly above high levels.

Tin: LME tin traded between the 10- and 20-day moving averages last night, and closed at $20,680/mt. The SHFE 1809 also dipped overnight to close 0.83% lower at 152,470 yuan/mt. The contract is expected to remain rangebound today with pressure from sluggish trading in the domestic spot market.

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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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