SHANGHAI, Jun 27 (SMM) –
Copper: LME copper touched a low of $6,692/mt on Tuesday as the weakening trend became apparent. The SHFE 1808 contract was firmer than its LME counterpart overnight, climbing up above the five-day moving average. While the depreciation of yuan helped support the SHFE copper price, it remains under pressure in the short term amid bearish sentiment and weak consumption. The development of the trade war will also lead the market, while investors look for cues from labour negotiations and consumption in high season in August-September. We expect LME copper to trade at $6,690-6,750/mt today with the SHFE 1808 contract at 51,500-52,000 yuan/mt. In the physical market, spot discounts are seen wider at 220-150 yuan/mt in Shanghai today. Spot discounts were heard at over 300 yuan/mt in Shandong, suggesting sluggish consumption in the local market.
Aluminium: LME aluminium recovered all the losses this week and rebounded to between the five- and 10-day moving averages overnight. The nonferrous complex still faces strong pressure as the US dollar stays strong. We expect LME aluminium to trade at $2,170-2,195/mt today. The SHFE 1808 contract hit a high of 14,190 yuan/mt overnight as Chinese yuan depreciated. It is likely to trade at 14,100-14,300 yuan/mt today with spot discounts at 60-20 yuan/mt.
Zinc: LME zinc opened above the lower Bollinger band this morning and we see no further downward room. It is likely to consolidate at $2,830-2,880/mt today. The SHFE 1808 contract hovered within a narrow range with its trading level slightly up. The MACD lines converge below the zero line while strong resistance is seen at the 23,000 yuan/mt level. The contract is expected to trade at 22,500-23,000 yuan/mt today.
Nickel: LME nickel last night clawed back all the losses made during the day with support at the 60-day moving average. This helped the SHFE 1809 contract climb all the way and away from the daily moving average overnight. Nickel prices rose on the shrinking inventory in Chinese and LME warehouses, limited nickel pig iron (NPI) production on China’s intensive environmental protection initiatives, and the newly commissioned 1-million-mt stainless steel project by Indonesia Tsingshan. We expect LME nickel to trade rangebound at high levels today with the SHFE 1809 contract at 114,000-116,000 yuan/mt. Spot prices are seen at 113,600-115,500 yuan/mt.
Lead: LME lead traded weakly compared with its SHFE counterpart and hovered around $2,400/mt for several days. With pressure from a strong US dollar, it will continue to test support at that level in the short term. The SHFE 1808 contract registered the second straight gains last night to close at 19,970 yuan/mt. Open interests increased 366 lots to 60,972 lots. Investors would monitor its capital inflow in the short term.
Tin: LME tin extended its decline overnight and touched a low of $20,010/mt. It is likely to test support at the $20,000/mt level in the short term. The SHFE 1809 contract continued to hover around the five-day moving average and consolidated at lows overnight. The contract remains under pressure in the near term given the strong US dollar its weak LME counterpart. Support is seen at the 143,000 yuan/mt level.
