SMM Morning Comments (May 14)

SHANGHAI, May 14 (SMM) – 

Copper: Macroeconomic pessimism dragged on copper prices while current low inventories capped their downside room. Trade fears intensified after China announced a new 25% import duty on $60 billion of US products on Monday. LME copper slid to the lowest since the end of January, at $6,007.5/mt. It lost 2.03% on the day and settled at $6,021.5/mt. Expanding shorts weighed the most-traded SHFE 1907 contract to a low of 47,350 yuan/mt, before it ended at 47,400 yuan/mt. Open interests grew 14,420 lots to 550,000 lots. We see the contract trading at 47,400-47,900 yuan/mt today, with its LME counterpart at $6,040-6,100/mt. Spot premiums are likely seen up to 100 yuan/mt as sellers firm up offers on downstream restocking. 

Aluminium: High costs and peak-season demand saw the SHFE 1906 contract outperforming its LME counterpart. While the other base metals declined overnight, the SHFE June contract ended slightly higher at 14,225 yuan/mt. It is expected to trade between 14,200-14,300 yuan/mt, with spot premiums up to 20 yuan/mt today. LME aluminium is seen trading at $1,800-1,820/mt today. 

Zinc: Continuous growth in LME zinc inventories, by some 7,000 mt overnight, depressed upward momentum in LME zinc. It closed 2.42% lower on the day at $2,577/mt, after it dipped to lows around $2,565/mt. The most-traded SHFE July contract traded with pressure from a lower yuan and market pessimism. Fundamentals are likely to provide limited support to prices in light of output recovery in the weeks ahead. Resistance from the five-day moving average will keep it at 20,450-20,950 yuan/mt, with LME zinc at $2,570-2,630/mt today. 

Nickel: Nickel prices fell overnight as the negative turn in the US-Chinese trade talks grew concerns among investors. LME nickel dipped to the lowest overnight at $11,725/mt and ended 1.63% lower at $11,765/mt. The most-active SHFE July contract decreased by 0.59% to close at 95,920 yuan/mt. It is expected to trade at 95,500-97,500 yuan/mt with LME nickel at $11,750-11,950/mt today. Spot prices are set at 96,000-100,000 yuan/mt. 

Lead: A re-escalation in US-Sino trade tension drove LME lead below the previous support from $1,800/mt, to a low of $1,773.5/mt. It lost 1.59% and finished at $1,790/mt, with open interests up 2,551 lots to 119,136 lots as shorts entered. There is a further downside room expected today. Without support below, the most-active SHFE 1906 contract ended 1.15% lower at 15,845 yuan/mt.  

Tin: The SHFE September contract hovered at lows last night, while LME tin slipped after opened at highs. Pressure from the 10-day moving average drove LME tin to a low of $19,245/mt, before it closed at $19,375/mt. Support is expected at the five-day moving average, or $19,000/mt today. The SHFE 1909 contract will trade with support from 145,000 yuan/mt today.