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SMM Morning Comments (Aug 2)
Aug 2,2018 09:57CST
price review forecast
SMM Morning Comments


Copper: LME copper plunged to $6,106/mt and closed at $6,124/mt overnight and the SHFE 1809 contract opened lower and fell to 49,010 yuan/mt as shorts built positions. A slowdown in CHinese economic growth and a strong US dollar will put pressure on prices of copper. But prices may find some support from supply issues and declining inventories. We retain our expectations that price trade rangebound in the short term with strong support at $5,900-6,000/mt. LME copper is likely to trade at $6,130-6,180/mt today with the SHFE 1809 contract at 49,100-49,600 yuan/mt. Spot premiums are seen higher at 30-70 yuan/mt.

Aluminium: LME aluminium fell to a low of $2,047.5/mt overnight. We expect it to trade at $2,045-2,060/mt today. The SHFE 1809 contract opened lower after it weakened overnight and fell to a low of 14,350 yuan/mt. The nonferrous complex fell across the board overnight as US-China trade disputes intensified. We expect the SHFE 1809 contract to trade at 14,350-14,450 yuan/mt today with spot discounts at 80-40 yuan/mt.

Zinc: LME zinc tumbled on Wednesday and lost the gains from Tuesday, as its MACD red line shortened. We expect it to continue to weaken and trade at $2,520-2,570/mt today. The SHFE 1809 contract opened lower overnight and consolidated around its daily moving average before it dropped to 21,270 yuan/mt. Anticipations of excess zinc supplies grew and China’s factory activity growth weakened in July. We expect the contract to weaken and trade at 21,000-21,500 yuan/mt today.

Nickel: LME nickel slumped on Wednesday and the SHFE 1809 contract lost the gains it made in two weeks amid renewed concerns about US-China trade war. We expect LME nickel to trade rangebound around $13,500/mt today and the SHFE 1809 contract to trade at 109,500-110,500 yuan/mt with spot prices at 109,000-110,000 yuan/mt.

Lead: LME lead fell to a low of $2,112/mt during the European trading session amid market worries over possible escalated trade tension between China and the US. It then rebounded to around the daily moving average and closed at $2,125/mt, down $39/mt from Tuesday. Support is set at $2,100/mt in the near term. The SHFE 1809 contract also traded weakly as investors held back. It dipped slower than its LME counterpart and closed at 18,310 yuan/mt overnight. We expect it to test support at 18,300 yuan/mt today.

Tin: LME tin was depressed by rising shorts overnight to close at a low of $19,750/mt as the US dollar strengthened. There is further downward room in the short run and support below will be at $19,600/mt. The SHFE 1809 contract opened at 146,550 yuan/mt and hovered at that level overnight. As its LME counterpart weakened and domestic consumption slowed, the contract will see limited upward momentum, with support at 145,000 yuan/mt.

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