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SMM Morning Comments (Aug 8)
Aug 8,2018 10:02CST
price review forecast
SMM Morning Comments


Copper: LME copper lost some early gains and closed at $6,150/mt on Tuesday. The SHFE October contract turned to the most liquid overnight. Copper prices are likely to rebound against the backdrop of resilient infrastructure construction in China. We expect LME copper to trade at $6,160-6,210/mt today with the SHFE 1810 contract at 49,300-49,800 yuan/mt. Spot premiums are seen at 60-100 yuan/mt.

Aluminium: With a weaker SHFE counterpart, LME aluminium shed early gains and touched a low of $2,032.5/mt on Tuesday. It is likely to trade at $2,035-2,055/mt today. The SHFE 1810 contract extended its daytime losses to a new low of 14,360 yuan/mt overnight. Strong resistance is seen while support will be the anticipated winter production cuts and the rising costs. We expect the contract to remain rangebound at 14,350-14,500 yuan/mt today with spot discounts at 50-10 yuan/mt.

Zinc: LME zinc rose and closed at $2,602/mt on Tuesday with support at the 10- and 20-day moving averages. We expect it to try to stand firmly above $2,600/mt and trade at $2,580-2,630/mt today. The SHFE 1810 contract rebounded and closed at 21,470 yuan/mt overnight after falling to a low of 21,300 yuan/mt. The contract shrugged off resistance at the middle Bollinger band and trod on an upward path. We expect it to trade at 21,300-21,800 yuan/mt today.

Nickel: Given low-level inventory of nickel across LME warehouses, LME nickel rebounded to around the daily moving average to a high of $13,890/mt. Pressure was at the $13,900/mt level. LME inventory continued to shrink 372 mt to 251,466 mt. The SHFE 1811 contract received support at the 40-day moving average and gained over 1% from Monday to close at 113,240 yuan/mt. A weakened US dollar and low stocks at SHFE warehouses accounted for the increase. We expect the contract to trade at 112,500-114,000 yuan/mt with LME nickel hovering at $13,900/mt today. Spot prices are set at 112,000-114,500 yuan/mt.

Lead: LME lead rose for two consecutive days and closed at $2,141/mt on Tuesday. Strong support was seen at $2,100/mt. The SHFE 1809 contract climbed and closed at 18,245 yuan/mt overnight. We expect the contract to come off today as Washington unveiled a list of roughly $16 billion worth of Chinese imports that will be hit with 25% tariffs from August 23.

Tin: LME tin inched up on a weaker US dollar and Chinese measures to support yuan amid intensified trade dispute with the US. It closed at $19,615/mt overnight, up $45/mt from Monday. We expect it to trade with support at $19,200/mt and resistance at $19,900/mt today. The SHFE 1809 contract fell after surging to a high of 147,260 yuan/mt. It is likely to trade at 145,000-147,000 yuan/mt with continued pressure today.


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