SHANGHAI, Jun 13 (SMM) –
Copper: Copper prices are likely to retreat in the short term on both the technical and fundamental fronts. The US dollar rose overnight in anticipation of the interest rate hike on Wednesday, which suppressed copper prices. We expect LME copper to trade at $7,170-7,230/mt with the SHFE 1808 contract at 53,600-54,100 yuan/mt. Trading in the spot market remained sluggish. Spot discounts are seen at 60-0 yuan/mt today.
Aluminium: LME aluminium fell to a low of $2,290/mt overnight as its SHFE counterpart slumped with pressure from shorts. We see LME aluminium trading at $2,290-2,310/mt today with the SHFE 1808 contract at 14,750-14,900 yuan/mt. Spot prices are expected at a discount of 20 yuan/mt to a premium of 20 yuan/mt.
Zinc: LME zinc traded rangebound overnight. It failed several times to climb up given strong resistance at the upper Bollinger band and at the $3,220/mt level, but it found some support at short-term moving averages. It is likely to continue to consolidate between the five-day moving average and the upper Bollinger band today with a trading range of $3,170-3,220/mt. The SHFE 1808 contract weakened overnight with support at the 10-day moving average. With strong resistance at the upper Bollinger band and weak fundamentals, we expect the contract to consolidate between 24,150-24,600 yuan/mt today.
Nickel: As the US dollar strengthened, LME nickel plummeted to a low of $15,155/mt overnight. With support from several moving averages, it rebounded below the daily moving average and hovered around the $15,240/mt level. As shorts significantly added their positions, the SHFE 1809 contract initially plunged to a low of 114,170 yuan/mt overnight. With support from several moving averages, it then rebounded and hovered around the daily moving average. We expect LME nickel to trade rangebound and weakly today with the SHFE 1809 contract at 114,000-116,000 yuan/mt. Spot prices are seen at 114,500-116,000 yuan/mt.
Lead: LME lead fell below the 10-day moving average overnight as most base metals weakened. It closed at $2,467/mt with open interests increasing 428 lots to 119,418 lots. It is likely to dip further to the 20-day moving average in the short term. The SHFE 1807 contract dropped 145 yuan/mt last night to close at 20,400 yuan/mt with open interests down 1,130 lots to 74,584 lots. Investors would be cautious about price declines from highs after delivery on June 15.
Tin: LME tin hovered at the five-day moving average overnight with its trading level slightly down from the previous day. We expect it to continue its rangebound pattern in the short term. The SHFE 1809 contract continued its rangebound and weak pattern overnight and moved below the five- to 10-day moving average. With limited support from its LME counterpart or the spot market, the contract is likely to remain weakly rangebound in the short term with support at the 150,000 yuan/mt level.
