SHANGHAI, Jul 26 (SMM) –
Copper: LME copper stood above $6,300/mt and hit a high of $6,331/mt due to a weakened US dollar and possible strike at the world’s largest copper mine Escondida in Chile. It is likely to continue its upward trend after US President Donald Trump and the European Union agreed on Wednesday to work towards a "zero tariff" deal. We forecast LME copper to trade at $6,340-6,395/mt with the SHFE 1809 contract at 50,000-50,500 yuan/mt. Spot cargoes are likely to see deeper discounts to 100-50 yuan/mt on higher futures prices.
Aluminium: LME aluminium jumped after opening overnight, to a high of $2,087.5/mt as the greenback weakened. However, it lost some 0.7% from Tuesday to close at $2,064/mt. Inventory across LME warehouses fell 2,900 mt to 1,209,225 mt after several days of increase. The SHFE 1809 contract also declined as investors covered their longs. As market sentiment improved, we expect the contract to trade at 14,200-14,400 yuan/mt today with LME aluminium at $2,066-2,086/mt. Spot discounts are set at 110-70 yuan/mt.
Zinc: LME zinc failed to stand firm above $2,600/mt with pressure from concerns over the trade spats between the US and EU. It dipped to a low of $2,573/mt but received support from the five-day moving average. It is likely to trade at $2,585-2,630/mt today as the trade war worries eased. The SHFE 1809 contract also tumbled overnight, to a low of 21,195 yuan/mt with limited upward momentum. The contract is expected to stop falling during the day and consolidate at 21,300-21,800 yuan/mt.
Nickel: LME nickel hovered around its daily moving average during the European trading session after it broke pressure at $13,800/mt and touched $13,840/mt. It closed at $13,715/mt with LME inventory falling 318 mt to 260,400 mt. The SHFE 1809 contract rebounded to just below its daily moving average after dipping to a low of 110,500 yuan/mt. We see upward room in the nickel prices, given low inventories across LME and domestic warehouses, tight supply of nickel pig iron, and more downstream demand for #300 stainless steel. The SHFE contract is expected to trade at 110,500-112,000 yuan/mt, with LME nickel at $13,600-13,900/mt today. Spot prices are seen at 110,500-112,500 yuan/mt.
Lead: LME lead surged before close and nudged up on Wednesday. Strong resistance was seen at the five-day moving average. We see limited upward momentum for the contract and expect it to consolidate at low levels in the short term. The SHFE 1809 contract opened lower and fell to 18,630 yuan/mt overnight, but it recovered some losses before close. Such downward correction after consecutive gains is expected.
Tin: LME tin rebounded and hit an intraday high of $19,880/mt on Wednesday. But it hasn’t shrugged off the rangebound pattern yet with resistance at $20,100/mt. The SHFE 1809 contract initially fell overnight, suggesting resistance remained. We expect it to stay rangebound today with resistance at 147,000 yuan/mt.
