SMM Morning Comments (May 16)

SHANGHAI, May 16 (SMM) – 

Copper: Eased trade concerns bolstered most base metals overnight. Weaker-than-expected US retail sales data depressed the greenback, and this also lifted pricesof metals. Maintenance across domestic copper smelters provided momentum in copper prices, with the most-traded SHFE copper up 0.29% and LME copper up 0.56%. We expect the contract to hover below 48,000 yuan/mt today, with support from 47,500 yuan/mt. LME copper is likely to trade at $6,050-6,100/mt. Spot premiums are seen firm at 20-100 yuan/mt today. 

Aluminium: Upside room in prices of alumina, due to environmental cutbacks in Shanxi province, is likely to support aluminium prices in the short term. We expect the most-liquid SHFE July contract to trade robustly at 14,300-14,400 yuan/mt today, with its LME counterpart at $1,840-1,860/mt. Spot premiums may stand at up to 20 yuan/mt today.  

Zinc: LME zinc registered the second consecutive trading day of increase as LME zinc inventories ceased rising. It expanded 1.58% and closed at $2,631.5/mt, after it climbed to a high of $2,636.5/mt. The most-traded SHFE July contract found support from the five-day moving average and also ended higher at 21,120 yuan/mt. As the KDJ indicators expanded upwards, the contract is expected to trade at 20,750-21,250 yuan/mt today with limited downside room. LME zinc is likely to consolidate around the five-day moving average, at $2,580-2,630/mt today. 

Nickel: LME nickel rebounded after a decline, with a high of $12,165/mt before ending at $12,140/mt. LME nickel stocks continued to shrink by 1,476 mt, to 167,268 mt. The SHFE July contract extended its increase and shrugged off pressure from 98,000 yuan/mt. It is seen trading at 96,000-99,000 yuan/mt, with LME nickel at $12,000-12,200/mt today. Spot prices are likely at 97,000-100,000 yuan/mt. 

Lead: Market sentiment improved after the US delayed a decision on new tariffs on car and auto part imports. This buoyed lead prices and drove LME lead to end 0.28% higher at $1,817/mt, with the SHFE 1906 contract finishing 0.75% higher at 16,080 yuan/mt. Pressure above will keep the SHFE June contract rangebound today. 

Tin: LME tin maintained its rangebound trend overnight as it closed at $19,700/mt, after pressure from the 20-day moving average weighed it from a high of $19,820/mt. The SHFE September contract lost gains from early trades overnight as its LME counterpart slid. It ended at 146,140 yuan/mt, and may trade between 145,000-147,000 yuan/mt today. LME tin will find support at $19,000/mt.