SMM Morning Comments (May 6)

SHANGHAI, May 6 (SMM) – 

Copper: Accumulated shorts, bolstered by upbeat US employment data, weighed LME copper to the lowest in the last three months, to $6,150/mt last week. It recorded the biggest one-day decline over 3% last week. This, together with re-escalated US-China trade tension, is likely to lower the most-traded SHFE June contract to around the Bollinger middle band today. The contract may trade at 48,200-48,700 yuan/mt with spot offers flat to a premium of 100 yuan/mt. The LME is closed for the Early May Bank Holiday today. 

Aluminium: LME aluminium fell below all moving averages to a low of $1,796/mt, from a high of $1,829/mt last Friday. Expanding aluminium inventories across LME warehouses depressed prices. It is expected to trade at $1,700-1,800/mt after trades resume on Tuesday. 

Zinc: Weak economic data from the US grew market pessimism and dragged LME zinc below all moving averages to a low of $2,717/mt last Tuesday. While a lower US dollar helped it to recover some losses on Friday, resistance lingered from the five- and 10-day moving averages. As LME inventories are expected to maintain their slow growth, LME zinc is likely to struggle at the 60-day moving averageand trade at $2,750-2,800/mt in the near term. The most-active SHFE June contract may test support at the 60-day moving average and trade at 21,500-21,900 yuan/mt today. 

Nickel: LME nickel lost most of the gains last Friday as it slid from a high of $12,390/mt with pressure from the five- and 10-day moving averages. It ended 0.29% higher on the day at $12,200/mt. We see the most-liquid SHFE June contract trading at 96,000-98,000 yuan/mt, with spot prices at 96,500-100,000 yuan/mt today. 

Lead: LME lead rebounded after it dropped to a two-year low last week. Pressure from the five-day moving average prevented it from exceeding $1,903.5/mt and ended it at $1,888.5/mt last Friday, down 3.1% on the week. The lower LME lead may drag on its SHFE counterpart today.  

Tin: LME tin declined for five consecutive trading days last week and fell below all moving averages, closing at $19,200/mt last Friday night. It is likely to rebound with support at $19,000/mt in the short run. The most-traded SHFE September contract is expected to trade weakly today with support from 146,000 yuan/mt and pressure from 149,000 yuan/mt.