SHANGHAI, Jun 12 (SMM) –
Copper: Longs were keen to take profit and left after the previous surges in copper prices. Unionised workers at BHP’s Spence copper mine in northern Chile approved a new labour contract on Monday, which pushed some speculative longs to leave the market.With a widely expected hike in interest rates and as the US dollar stabilised, copper prices are likely to retreat in the short term. LME copper fell overnight but support is seen at the $7,200/mt level. We believe that this round of increases in copper prices has yet to end. LME copper is likely to trade at $7,170-7,230/mt today while the SHFE 1808 contract is likely to trade at 53,600-54,200 yuan/mt. Spot prices are seen at discounts of 50 yuan/mt to premiums of 10 yuan/mt.
Aluminium: LME aluminium attempted to stand above the daily moving average and touched a high of $2,325/mt with support from longs during the European trading session. It was then dragged down by SHFE aluminium to a low of $2,285/mt. It is expected to trade at $2,290-2,320/mt today. The SHFE 1808 contract traded rangebound after it dipped to a low of 14,840 yuan/mt with pressure from shorts. It is likely to trade at 14,700-15,000 yuan/mt today with spot discounts at 30-10 yuan/mt.
Zinc: LME zinc managed to stand firmly above the $3,200/mt level overnight with support at the five-day moving average. It opened below the upper Bollinger band this morning and is likely to try to break the band during the day with a trading range of $3,170-3,220/mt. The SHFE 1808 contract edged up slightly overnight and tested the support at the five-day moving average. Given the firm resistance at the upper Bollinger band, we see limited upward momentum with sluggish fundamentals. We expect SHFE zinc to trade at 24,200-24,650 yuan/mt today with support at the five-day moving average.
Nickel: As the US dollar strengthened, LME nickel dipped and consolidated around the $15,280/mt level overnight. The market remained cautious given the stronger US dollar and worries over the potential trade war. The SHFE 1809 contract fell from the daily moving average and hovered around the 114,870 yuan/mt level within a narrow range overnight. We expect LME nickel to trade weakly and rangebound today with the SHFE 1809 contract at 114,100-116,000 yuan/mt. Spot prices are seen at 114,500-116,000 yuan/mt.
Lead: As the US dollar gained, LME lead fell and hovered around the daily moving average within a wide range overnight after hitting a high of $2,505/mt. We see strong resistance at the five-day moving average and support at the 10-day moving average, and expect it to consolidate between the two today. Longs pushed the SHFE 1807 contract up before closure overnight, and we expect it to trade rangebound today.
Tin: LME tin hit a high of $21,265/mt but lost some gains during the late European trading hours. We expect it to trade rangebound under pressure from the strong US dollar in the short term. The SHFE 1809 contract fell from the opening and moved around short-term moving averages overnight. It closed below the five-day moving average. We expect the contract to consolidate in the short term. Given the weak spot market, we see support at the 150,000 yuan/mt level but limited upward momentum for the contract.
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