SMM Morning Comments (May 10)

SHANGHAI, May 10 (SMM) – 

Copper: LME copper rallied after trade fears drove it to a low of $6,058.5/mt overnight. The most-traded SHFE July contract also rebounded to a high of 47,900 yuan/mt, closing at 47,880 yuan/mt, as longs entered. We see it trading at 47,550-48,100 yuan/mt with LME copper at $6,130-6,180/mt today. While downstream consumers stockpile before the weekend, a likely influx of seaborne copper will prevent sellers from hiking offers. Spot offers are seen remaining flat to a premium of 100 yuan/mt today. 

Aluminium: LME aluminium continued to regain losses and settled 0.42% higher on the day at 1,806.5/mt after rising to a high of $1,810/mt. The SHFE June contract found support from fundamentals and also ended higher at 14,030 yuan/mt. It is expected to trade between 14,000-14,100 yuan/mt with LME aluminum at $1,750-1,850/mt today. Spot premiums may stand up to 20 yuan/mt. 

Zinc: Weak fundamentals further lowered LME zinc, which lost support from the Bollinger lower band and slid for the third consecutive trading day at $2,638/mt. As the US-China trade conflicts drove Chinese yuan lower, the most-traded SHFE July contract stemmed its decline and closed slightly higher overnight at 20,885 yuan/mt. However, a potential rebound in refined zinc supply as capacity returns will keep investors cautious, seeing the contract at 20,700-21,150 yuan/mt today. 

Nickel: Lowered risk appetite ahead of the US-China trade talks drove investors to cut longs. This depressed LME nickel to the lowest overnight at $11,730/mt, before a lower US dollar index lifted it to end at $11,815/mt. We see it trading at $11,700-12,000/mt, with the most-liquid SHFE 1907 contract at 94,500-96,500 yuan/mt today. Spot prices are set at 95,000-99,000 yuan/mt. 

Lead: Worries about macroeconomic development intensified and dragged LME lead to a three-year low of $1,830.5/mt, before it finished at $1,844.5/mt. The SHFE 1906 contract also weakened to the lowest in two years, at 16,100 yuan/mt, as shorts accumulated. It rebounded and closed at 16,230 yuan/mt, down 0.34% on the day. 

Tin: Data from Indonesia trade ministry showed that refined tin exports of the country expanded 43% year on year in April, and this lowered LME tin from a high of $19,460/mt last night. It is expected to test support at $19,000/mt today. The SHFE 1909 contract lost support at the 146,000 yuan/mt level as its LME counterpart slipped. Support is seen at 145,000 yuan/mt today.