SMM Morning Comments (May 9)

SHANGHAI, May 9 (SMM) – 

Copper: Re-escalation in the US-China trade tensions continued to grow market worries. This kept LME copper in a downside trend, preventing it from exceeding $6,173/mt overnight. The most-traded SHFE 1906 contract was dragged by its weaker LME counterpart, and slid to a low of 47,540 yuan/mt, before closed at 47,620 yuan/mt. As the market awaits news out of the US-China trade talks, the contract may trade between 47,200-47,700 yuan/mt, with LME copper at $6,110-6,170/mt today. Spot offers are seen flat to a premium of 100 yuan/mt. 

Aluminium: Compared with the SHFE 1906 contract, LME aluminium felt a greater impact from macroeconomic pessimism, as it lost 1.05% overnight and finished at $1,799/mt, with a low of $1,793/mt. It is seen trading between $1,750-1,800/mt today, with the SHFE June contract at 13,900-14,000 yuan/mt. Fundamentals will cap any decline in the contract today. Spot premiums are likely at 20-40 yuan/mt. 

Zinc: The US-China trade fears and a buildup of over 6,000 mt in LME zinc inventories reduced LME zinc to the lowest in two months. It fell below all moving averages and ended lower for the two consecutive trading day, at $2,647/mt, down 1.93% on the day. We see it trading below the Bollinger lower band, at $2,630-2,680/mt today. The most-active SHFE July contract hovered around the Bollinger lower band with limited upward momentum as a slew of capacity is expected to return in May. It will test support at the Bollinger lower band, trading at 20,700-21,150 yuan/mt today. 

Lead: While LME lead rebounded and ended 0.62% higher at $1,880/mt overnight, pressure from shorts will limit its upside room today. The SHFE 1906 contract outperformed other base metals, with support from 16,300 yuan/mt. 

Tin: Trade concerns extended the rangebound trend in LME tin and the most-liquid SHFE September contract overnight. LME tin consolidated around $19,450/mt and may find support at $19,000/mt and resistance at $19,600/mt today. With pressure from the five- and 10- day moving averages, the SHFE 1909 contract may trade between 146,000-148,500 yuan/mt today.