SMM Morning Comments (Jul 25)

Published: Jul 25, 2018 09:55

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SMM Morning Comments

SHANGHAI, Jul 25 (SMM) –

Copper: LME copper stood above $6,300/mt and touched the 20-day moving average as investors added their long bets on threat of a strike at Escondida copper mine in Chile. SHFE base metals gained for the most part overnight given positive signals regarding domestic financial policy at the State Council Standing Committee meeting Monday. The SHFE 1809 copper contract strengthened to a high of 50,270 yuan/mt, and closed 870 yuan/mt higher from Monday at 50,090 yuan/mt. LME copper is likely to test pressure at the 20-day moving average today with its trading range at $6,270-6,330/mt, and the SHFE 1809 contract is seen trading at 49,900-51,300 yuan/mt. Spot offers are likely to be at a discount of 30 yuan/mt to a premium of 20 yuan/mt.

Aluminium: LME aluminium rallied twice, and hit a high of $2,114/mt as the US dollar weakened. LME inventory increased 2,850 mt to 1,212,125 mt overnight. As the probability for the US to lift its sanction against Rusal increases, LME inventory is likely to pile up further in the near term. Heavy pressure will be at the $2,100/mt level, and the contract is expected to trade at $2,065-2,100/mt today. The SHFE 1809 contract is expected at 14,350-14,500 yuan/mt, with capital inflows. However, the upward momentum may not last long. Spot discounts are expected at 100-60 yuan/mt today.

Zinc: LME zinc price was firm overnight as it surged to a high of $2,640.5/mt and hovered around $2,600/mt. With improved market sentiment, we expect LME zinc to trade at $2,580-2,630/mt today. The SHFE 1809 contract entered an upward trend as it broke pressure at the 20-day moving average. We see it testing that level today and trading at 21,400-21,900 yuan/mt.

Nickel: Both LME nickel and the SHFE 1809 contract closed over 1% higher as the US dollar dipped. LME nickel climbed up during the European trading session, and touched a high of $13,770/mt with resistance at $13,800/mt. We expect it to trade robustly around $13,500/mt today, with SHFE 1809 contract hovering at 110,000-111,000 yuan/mt. Spot prices are seen at 109,500-111,000 yuan/mt.

Lead: LME lead hit a high of $2,182.5/mt before it met pressure at the five-day moving average and lost some gains overnight. The contract consolidated at lows and is expected to stay so today. The SHFE 1809 contract climbed to 18,775 yuan/mt before it fell to the 10-day moving average overnight. We still see an upward trend for the contract.

Tin: Both LME tin and the SHFE 1809 contract rose overnight. We expect the latter to trade rangebound at 144,000-146,000 yuan/mt in the near term given ore supply shortage in Myanmar as well as potential tariffs threats from the US.

Morning comments Futures movement

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