SHANGHAI, Jul 20 (SMM) –
Copper: LME copper fell to a one-year low at $5,988/mt as worries over slower growth of China’s economy and uncertainties over trade war continued to depress market sentiment. It closed $125/mt lower from Wednesday at $6,054/mt. We see limited support at the $6,000/mt level in the short run with pressure from increasing shorts. The SHFE 1809 contract also lost 460 yuan/mt to close at 48,350 yuan/mt, with open interests up some 10,000 lots. It is likely to trade at 48,000-48,500 yuan/mt today with LME copper at $6,020-6,080/mt. Spot offers are set to stand firm at a discount of 20 yuan/mt to a premium of 20 yuan/mt.
Aluminium: LME aluminium tested support at $2,000/mt twice and touched a low of $2,001.5/mt while base metals weakened across the board. It closed at $2,006/mt with LME inventory up 5,100 mt to 1,203,975 mt. We expect it to test support again at the $2,000/mt level, and trade at $1,990-2,020/mt during the day. The SHFE 1809 contract hovered within a narrow range after it jumped to a high of 14,095 yuan/mt. Its trading range is seen at 14,000-14,100 yuan/mt today with spot discounts at 90-50 yuan/mt.
Zinc: LME zinc returned to the daily moving average after hitting a high of $2,578.5/mt with limited upward momentum. The SHFE 1809 contract followed a similar movement without strong support. It closed at 21,125 yuan/mt, flat from the previous day, while LME zinc tumbled 2.1% to $2,565/mt. We expect the SHFE contract to trade at 20,800-21,300 yuan/mt today with LME zinc at $2,530-2,580/mt.
Nickel: LME nickel tested twice but failed to stand above the $13,500/mt level during the European trading session. It returned to hover around the daily moving average and closed nearly 2% lower at $13,405/mt, while LME inventory fell 1,308 mt to 261,108 mt. The SHFE 1809 contract slumped to a low of 107,800 yuan/mt amid surging shorts as import window opened and as the China-US trade conflict intensified. It inched down from Wednesday to close at 108,970 yuan/mt. We expect it to trade at 108,000-109,500 yuan/mt today, and LME nickel to consolidate at around $13,500/mt. Spot prices are seen at 108,500-110,000 yuan/mt.
Lead: As shorts and longs diverged, LME lead traded rangebound around its daily moving average after it touched a new low in close to one year at $2,095/mt overnight. Shorts are likely to drag the contract down as it is back on the downward track. Support at the $2,100/mt level is crucial in the short term. The SHFE 1808 contract fell to below its daily moving average after it hit a high of 19,045 yuan/mt overnight. We see limited upward momentum for the contract in the short term as it came off after it met pressure at the five-day moving average in the past two days. But support at 18,600 yuan/mt sustains. We expect the contract to consolidate in the near term.
Tin: LME tin recovered some early losses overnight and is likely to remain rangebound in the short term with support at the $19,000/mt level. The SHFE 1809 contract came off from its initial gains overnight and is expected to continue to trade under pressure in the near term with support at the 142,500 yuan/mt level and resistance at the 146,000 yuan/mt level.