SMM Morning Comments (May 8)

SHANGHAI, May 8 (SMM) – 

Copper: Macroeconomic caution may continue to weigh on copper prices today. LME copper is unlikely to break pressure from the five-day moving average, after it ended 1.31% lower overnight at $6,151.5/mt. Departing longs drove it to a low of $6,151/mt last night, and saw open interests falling 5,610 lots to 288,000 lots. The most-liquid SHFE June contract faced pressure from shorts and slid to a low of 47,760 yuan/mt, closing 0.99% lower at 47,810 yuan/mt. We see it facing continued pressure from the Bollinger lower band today, trading at 47,500-48,100 yuan/mt. LME copper is likely to trade at $6,150-6,200/mt. Spot offers are likely to maintain in premiums, up to 100 yuan/mt today, as the delivery day approaches. 

Aluminium: The SHFE June contract bolstered its LME counterpart to a high of $1,820.5/mt, and pulled it 1.06% higher on the day at $1,818/mt. Stable release of consumption and leaving shorts led to a rebound in the SHFE 1906 contract, to a high of 14,040 yuan/mt overnight. Trade uncertainties are likely to keep it between 14,000-14,100 yuan/mt, with LME aluminium at $1,800-1,820/mt today. Spot offers are set flat to a premium of 20 yuan/mt. 

Zinc: LME zinc is expected to struggle at the $2,700/mt level, trading at $2,685-2,735/mt today, after it closed 2.55% lower overnight at $2,699/mt. A rebound in the US dollar index dragged it from a high of $2,750/mt before closing. The most-active SHFE July contract failed to stand firm above the daily-moving average, as shorts entered and weighed it to a low of 21,085 yuan/mt, before it closed at 21,180 yuan/mt. While some shorts are likely to take profits and exit today, technical pressure above will limit upward momentum of the contract. It is seen trading at 21,150-21,650 yuan/mt today. 

Lead: LME lead showed no sign of ceasing its decline as macroeconomic risk intensified on trade tensions. It ended 1.06% lower at $1,868.5/mt amid quiet trades. The most-traded SHFE June contract fell to a low of 16,295 yuan/mt and closed 0.37% lower overnight at 16,310 yuan/mt. It may extend its rangebound trend at lows, with cautious investors. 

Tin: LME tin tested resistance from the 10-day moving average, with a high of $19,680/mt, before it ended 1.04% higher at $19,400/mt. The most-active SHFE September contract consolidated at lows with limited upside momentum. Shorts entered and settled it 0.43% lower at 147,230 yuan/mt. It is expected to trade with support at 146,000 yuan/mt and resistance at 148,500 yuan/mt.