SMM Morning Comments (Jun 6)

Published: Jun 6, 2018 09:41

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SMM Morning Comments

SHANGHAI, Jun 6 (SMM) –

Copper: Trading levels of copper prices climbed up as the US dollar weakened and as the worries over supply from the Escondida labour negotiation sustained. The SHFE 1807 and 1808 contracts surged overnight and are expected to extend their gains today. We see LME copper trading at $7,100-7,160/mt today with the most traded SHFE contract at 52,800-53,300 yuan/mt. As prices of futures further rose, spot prices are seen lower at discounts of 40 yuan/mt to premiums of 20 yuan/mt.

Aluminium: LME aluminium hovered around the $2,320/mt level overnight after hitting a high of $2,340/mt. We expect it to trade rangebound at $2,300-2,340/mt today. With support from longs, the SHFE 1807 contract climbed up to a high of 14,710 yuan/mt overnight after touching a low of 14,615 yuan/mt. The contract remained rangebound among several moving averages and is likely to trade at 14,600-14,750 yuan/mt today. Spot discounts are seen at 70-30 yuan/mt.

Zinc: LME zinc consolidated around the $3,195/mt level overnight after it surged to a high of $3,201/mt. Given the strong resistance at the $3,200/mt level, we expect it to trade rangebound at $3,160-3,250/mt today. As its LME counterpart rose, the SHFE 1807 contract moved away from the daily moving average and jumped to a high of 24,780 yuan/mt overnight. We expect it to trade at 24,400-24,850 yuan/mt today with support from the upper Bollinger band. Investors should watch out for resistance at the 24,800 yuan/mt level. The 0# common brands and Shuangyan are likely to trade at premiums of 0-50 yuan/mt over the SHFE 1806 contract.

Nickel: LME nickel received a boost from its stronger SHFE counterparts last night due to the impact of domestic environmental inspections. LME closed at $15,755/mt as inventory declinined 5,538 mt to 281,214 mt overnight. We see it hovering at highs today with the SHFE 1807 contract trading at 116,000-118,000 yuan/mt. Spot prices are seen at 115,500-117,500 yuan/mt.

Lead: LME lead surged to a three-month high of $2,534/mt as the US dollar weakened last night. It closed at $2,507/mt with open interests decreasing 865 lots to 116,333 lots. We see it facing pressure to stand above $2,500/mt. It will hover at that level today. The SHFE 1807 contract was depressed by shorts after rising to a high of 20,780 yuan/mt last night. It closed at 20,575 yuan/mt with open interests declining 2,892 lots. Investors should monitor changes in the open interests today.

Tin: As the US dollar fell, LME tin inched up during European trading hours overnight. We expect it to continue its strong and rangebound pattern today with resistance at the $20,900/mt level. The SHFE 1809 contract rose above the five-day moving average at one point over night but closed below that moving average due to pressure above. We expect it to remain ranegbound today. Spot prices are seen at 148,500-150,500 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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