SMM Morning Comments (Jul 16)

Price Review & Forecast 09:57:47AM Jul 16, 2018 Source:SMM

SHANGHAI, Jul 16 (SMM) –

Copper: Copper prices are unlikely to dip much in the short run given narrowing price gap between refined and scrap copper. Pressure will remain at the five-day moving average. LME copper is seen trading at $6,200-6,260/mt with the SHFE 1809 contract at 48,900-49,400 yuan/mt today. Spot discounts are expected at 160-110 yuan/mt over the 1808 contract. The key thing to watch this week will be salary negotiation at Escondida copper mine in Chile. 

Aluminium: LME aluminium failed to break pressure at the five-day moving average last Friday night, as it rebounded to a high of $2,058/mt on weakened US dollar. It is expected to diverge further from that moving average level today with trading range at $2,015-2,050/mt. The SHFE 1809 contract traded weakly tracking its LME counterpart, but received some support from rising alumina prices. It is seen trading at 13,950-14,150 yuan/mt today, with spot offers at a discount of 20 yuan/mt to a premium of 20 yuan/mt on the last trading day before delivery. 

Zinc: LME zinc rebounded and closed at $2,583.5/mt last Friday night, up $8/mt from a day before as the US dollar index dipped on lower-than-expected consumer confidence data. It is likely to hover around $2,560-2,610/mt today. The SHFE 1809 contract also gained, on robust Chinese import and export data. It closed at 20,905 yuan/mt, up 310 yuan/mt from the previous day, with pressure at 21,000 yuan/mt. Given declining domestic inventory, the contract is expected to trade at 20,600-21,100 yuan/mt, and continue to test resistance at 21,000 yuan/mt level. 

Nickel: LME nickel lost the previous gains last Friday and its SHFE counterpart also fell. The market was cautious as the US-China trade tensions remained in the spotlight and as it was in anticipation of an open import arbitrage window. But nickel prices were also buoyed by low inventories in Chinese and LME warehouses, limited nickel pig iron (NPI) production on environmental probes and recovering stainless steel production. We expect LME nickel to hover at $14,000-14,300/mt in the short term with the SHFE 1809 contract at 112,000-113,500 yuan/mt. Spot prices are seen at 112,500-114,000 yuan/mt.

Lead: LME lead traded weakly compared with its SHFE counterpart, and remained in a downward trend last Friday night. It is seen consolidating at $2,200/mt in the short term. The SHFE 1808 contract rebounded back to above 19,000 yuan/mt, to a high of 19,335 yuan/mt, with open interests up 3,000 lots to 55,178 lots. We expect the contract to halt its downturn and stabilise today. 

Tin: LME tin rose last Friday but met some pressure before close. We expect it to remain rangebound in the short term with resistance at the $19,900/mt level. The SHFE 1809 contract extended its mild gains last Friday night. We expect it to trade strongly rangebound in the short term with resistance at the 146,500 yuan/mt level.

 

SMM Morning Comments (Jul 16)

Price Review & Forecast 09:57:47AM Jul 16, 2018 Source:SMM

SHANGHAI, Jul 16 (SMM) –

Copper: Copper prices are unlikely to dip much in the short run given narrowing price gap between refined and scrap copper. Pressure will remain at the five-day moving average. LME copper is seen trading at $6,200-6,260/mt with the SHFE 1809 contract at 48,900-49,400 yuan/mt today. Spot discounts are expected at 160-110 yuan/mt over the 1808 contract. The key thing to watch this week will be salary negotiation at Escondida copper mine in Chile. 

Aluminium: LME aluminium failed to break pressure at the five-day moving average last Friday night, as it rebounded to a high of $2,058/mt on weakened US dollar. It is expected to diverge further from that moving average level today with trading range at $2,015-2,050/mt. The SHFE 1809 contract traded weakly tracking its LME counterpart, but received some support from rising alumina prices. It is seen trading at 13,950-14,150 yuan/mt today, with spot offers at a discount of 20 yuan/mt to a premium of 20 yuan/mt on the last trading day before delivery. 

Zinc: LME zinc rebounded and closed at $2,583.5/mt last Friday night, up $8/mt from a day before as the US dollar index dipped on lower-than-expected consumer confidence data. It is likely to hover around $2,560-2,610/mt today. The SHFE 1809 contract also gained, on robust Chinese import and export data. It closed at 20,905 yuan/mt, up 310 yuan/mt from the previous day, with pressure at 21,000 yuan/mt. Given declining domestic inventory, the contract is expected to trade at 20,600-21,100 yuan/mt, and continue to test resistance at 21,000 yuan/mt level. 

Nickel: LME nickel lost the previous gains last Friday and its SHFE counterpart also fell. The market was cautious as the US-China trade tensions remained in the spotlight and as it was in anticipation of an open import arbitrage window. But nickel prices were also buoyed by low inventories in Chinese and LME warehouses, limited nickel pig iron (NPI) production on environmental probes and recovering stainless steel production. We expect LME nickel to hover at $14,000-14,300/mt in the short term with the SHFE 1809 contract at 112,000-113,500 yuan/mt. Spot prices are seen at 112,500-114,000 yuan/mt.

Lead: LME lead traded weakly compared with its SHFE counterpart, and remained in a downward trend last Friday night. It is seen consolidating at $2,200/mt in the short term. The SHFE 1808 contract rebounded back to above 19,000 yuan/mt, to a high of 19,335 yuan/mt, with open interests up 3,000 lots to 55,178 lots. We expect the contract to halt its downturn and stabilise today. 

Tin: LME tin rose last Friday but met some pressure before close. We expect it to remain rangebound in the short term with resistance at the $19,900/mt level. The SHFE 1809 contract extended its mild gains last Friday night. We expect it to trade strongly rangebound in the short term with resistance at the 146,500 yuan/mt level.