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SMM Morning Comments (Jun 7)
Jun 7,2018 09:39CST
price review forecast
SMM Morning Comments


Copper: Copper prices extended their gains overnight. LME copper managed to stand above the $7,200/mt level and hit the highest level in three and a half months. The SHFE 1808 contract broke the 54,000 yuan/mt level with positive technical indicators. As the US dollar weakened and without further development in the Chile Escondida labour negotiation, copper prices are likely to rise further in the short term. We expect LME copper to trade at $7,200-7,300 yuan/mt today with the SHFE 1808 contract at 53,700-54,200 yuan/mt. Spot discounts are seen lower at 80-30 yuan/mt as price spreads between contracts narrow and as prices of futures climb up.

Aluminium: As its SHFE counterpart rose, LME aluminium hit a high of $2,344/mt overnight after touching a low of $2,307/mt. It now stands above all moving averages and is likely to try to break the $2,355/mt level today with a trading range of $2,320-2,360/mt. Dragged by shorts, the SHFE 1807 contract fell to a low of 14,795 yuan/mt overnight after it hit a high of 14,950 yuan/mt. It then traded rangebound as shorts and longs diverged and both added their positions. We expect the contract to trade at 14,750-15,000 yuan/mt today with spot discounts at 80-40 yuan/mt.

Zinc: LME zinc managed to stand firmly above the upper Bollinger band overnight but met strong resistance at $3,200/mt. We expect it to trade at $3,170-3,220/mt today. The SHFE 1807 contract regained some losses and consolidated around the 24,570 yuan/mt level overnight after it fell to a low of 24,470 yuan/mt. The SHFE 1808 contract rebounded and hovered around the 24,335 yuan/mt level within a narrow range overnight after touching a low of 24,235 yuan/mt. The SHFE 1808 contract’s 10- and 20-day moving averages expand upwards with the 20-day moving average breaking the 40-day moving average. We see firm support from the upper Bollinger band and resistance from the 24,700 yuan/mt level. The SHFE 1808 contract is likely to trade at 24,200-24,650 yuan/mt today.

Nickel: LME nickel hovered around the $15,680/mt level under the daily moving average overnight. The SHFE 1809 contract traded rangebound at highs and edged down overnight. Given the intensive environmental protection initiatives in China, we expect LME nickel to hover at highs and the SHFE 1809 contract to trade at 117,000-118,600 yuan/mt today. Spot prices are seen at 116,500-118,100 yuan/mt.

Lead: LME lead registered the sixth consecutive day of increase at $2,531/mt with support from long positions. We expect it to consolidate at current levels today with support at $2,500/mt. The SHFE 1807 contract traded relatively weakly last night below the daily moving average. However, it surged to a high of 20,810 yuan/mt with buoyance from rising SHFE copper prices. The contract is likely to continue its weak trend during the day.

Tin: LME tin traded robustly last night as the US dollar index dipped for three consecutive trading days. It broke pressure from the daily moving average with resistance at $21,200/mt in the short term. We expect it to strengthen further today. The SHFE 1809 contract also rose last night with the highest level at 155,040 yuan/mt. We see it hovering at highs with support from a strong LME tin today. Pressure is seen at 157,500 yuan/mt.

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