SMM Morning Comments (Apr 26)

SHANGHAI, Apr 26 (SMM) –

Copper: A strong US dollar dragged three-month LME copper to a four-week low of $6,340/mt on Thursday, before LME copper ended 1.48% lower at $6,346/mt. The most active SHFE June contract dropped close to 1% to end at 48,720 yuan/mt overnight, its lowest since the start of April. The buildup of short positions accounted for overnight losses in SHFE copper. Both LME and SHFE copper have fallen below all short-term moving averages and this is likely to deter them from performing strongly today. LME copper is expected to trade between $6,340-6,390/mt with SHFE copper at 48,500-49,000 yuan/mt. Spot prices are seen at a discount of 70 yuan/mt to a premium of 30 yuan/mt as selling inclination among spot sellers prompts them to continue to slash offers. Spot trades are likely to remain quiet as lower prices of futures keep downstream buyers on the sideline.

Aluminium: Three-month LME aluminium came off from earlier highs to close at $1,858.5/mt on Thursday, down 0.69% on the day. Thursday’s declines in LME aluminium was mainly attributed to the buildup of short position. It is expected to trade between $1,850-1,880/mt today. The most traded SHFE June contract traded in a narrow range to close marginally lower at 14,220 yuan/mt overnight, still hanging on above all short-term moving averages. As the greenback remained robust this morning, SHFE aluminium is expected to trade at 14,150-14,250 yuan/mt today with spot discount of up to 40 yuan/mt.

Zinc: Three-month LME zinc fluctuated to close marginally lower at $2,746.5/mt on Thursday. Despite high LME cash premiums over the three-month contract, LME zinc inventories dipped for two consecutive days, and this allayed concerns about more deliveries to LME warehouses. LME zinc is expected to continue to trade around the lower Bollinger band today with most transactions at $2,725-2,775/mt. The most active SHFE June contract opened higher and climbed to a high of 21,520 yuan/mt before it lost some gains to hover around the daily moving average in a range of 40 yuan/mt to close 0.2% higher at 21,465 yuan/mt overnight. Recovering consumption and anticipated supply growth are likely to keep SHFE zinc rangebound today. Most transactions are likely to occur at 21,300-21,700 yuan/mt.

Nickel: As the dollar climbed, three-month LME fell to a more than two-month low of $12,310/mt on Thursday before it ended 0.8% lower at $12,325/mt. The most traded SHFE June contract traded around 97,500 yuan/mt in a narrow range overnight, ending 0.2% lower at 97,520 yuan/mt. LME nickel is expected to trade rangebound between $12,250-12,450/mt today with SHFE nickel at 96,500-98,500 yuan/mt. Spot prices are seen at 97,500-101,000 yuan/mt.

Lead: Three-month LME lead rebounded from earlier lows to close 0.29% higher at $1,930/mt on Thursday. Despite support at the $1,900/mt level, moving averages have yet to turn around to expand upwards. LME lead is expected to remain rangebound in the short run. The most traded SHFE June contract followed the rally in its LME counterpart higher overnight, up 0.36% to close at 16,530 yuan/mt. Anticipated maintenance across smelters kept SHFE lead from extending its declines.

Tin: Three-month LME tin recovered from an earlier low of $19,545/mt to end 0.66% higher at $19,830/mt on Thursday. Support is seen at $19,500/mt while resistance is at $20,100/mt. The most liquid SHFE September contract opened lower and traded in a tight range overnight, ending 0.42% lower at 146,650 yuan/mt. Support is seen at 146,500 yuan/mt while resistance is at 148,000 yuan/mt.