SHANGHAI, Jul 23 (SMM) –
Copper: LME copper rebounded at the $6,000/mt level and jumped above the five-day moving average to a high of $6,170/mt, as support from fundamentals emerged amid improved sentiment. The SHFE 1809 contract also strengthened to a high of 49,100 yuan/mt and stayed above the 49,000 yuan/mt level. Inventories at SHFE warehouses have dipped over 60,000 mt since June 1 due to limited arrival of imported cargos. We expect copper prices to rebound if macroeconomic developments do not exacerbate further. LME copper is seen trading at $6,130-6,185/mt today with the SHFE 1809 contract at 49,000-49,500 yuan/mt. Spot offers are expected at flat to a premium of 50 yuan/mt.
Aluminium: LME aluminium broke pressure at the five-day moving average and surged to a high of $2,047/mt as the US dollar fell. It closed at $2,042.5/mt with LME inventory up 4,425 mt to 1,208,400 mt. The US Treasury secretary Steven Mnuchin said on Friday that Rusal is likely to be taken off the US list of sanctioned entities if acceptable solutions can be found. We expect LME aluminium to trade at $2,030-2,055/mt today. The SHFE 1809 contract was pushed up by its LME counterpart to a high of 14,140 yuan/mt. It closed at 14,115 yuan/mt, with SHFE/LME price ratio falling to 6.91. The contract needs more momentum to rise further in the short run as the inventory is set to pile up in slack season. Trading range is seen at 14,000-14,150 yuan/mt today, with spot discounts at 90-50 yuan/mt.
Zinc: As base metals rose for the most part on weakened US dollar, LME zinc climbed up but failed to stand firm above $2,585/mt last Friday night. It closed at $2,578/mt, slightly up from the previous trading day. We expect it to trade at $2,550-2,600/mt today with the SHFE 1809 contract at 21,030-21,530 yuan/mt. The 1809 contract will receive support as inventories at three major Chinese markets remained at low levels of the year.
Nickel: LME nickel slightly weakened to its daily moving average last Friday night after rising earlier as the US dollar dipped. The SHFE 1809 contract hovered around its daily moving average last Friday night with shorts and longs struggling around the 109,800 yuan/mt level. We expect nickel prices to continue to be rangebound in the short term. LME nickel is likely to hover around the $13,500/mt level today with the SHFE 1809 contract at 109,500-110,500 yuan/mt. Spot prices are seen at 109,000-110,000 yuan/mt.
Lead: LME lead entered a downward trend and may weaken in the short run as it tests support at the $2,100/mt level. The SHFE 1809 contract hovered at low levels for four consecutive trading days and failed to broke resistance at the five-day moving average. However, it received some support when it hit lows around 18,300 yuan/mt. We forecast it to continue its rangebound trend in the short run.
Tin: LME tin was subdued under short-term moving averages and consolidated last Friday, receiving limited lift from a weakened US dollar. We expect it to stay at current levels in the short term with support at $19,000/mt. The SHFE 1809 contract extended its daytime gains last Friday night. We expect it to strengthen in the short term with resistance at the 147,500 yuan/mt level.
