SMM Morning Comments (May 20)

SHANGHAI, May 20 (SMM) – 

Copper: LME copper slid after an increase as the US dollar rose on the escalated US-China trade dispute. The Chinese yuan weakened to near the key 7-per-dollar level, and a defence of the 7 level would underpin copper prices. With support from the five-day moving average, LME copper is likely to trade at $6,050-6,100/mt with the SHFE July contract at 47,500-48,000 yuan/mt today. Sufficient supplies in the spot market will keep premiums below 60 yuan/mt today. 

Aluminium: LME aluminium extended the weak trend from the Asian trading session, as it slipped to a low of $1,826.5/mt and ended the trading day 1.27% lower at $1,831.5/mt. Prices may face pressure as the US reached a deal to lift steel and aluminium tariffs on Canada and Mexico. It is expected to trade at $1,830-1,850/mt with the most-traded SHFE July contract at 14,250-14,350 yuan/mt today. Spot offers are set flat to a premium of 20 yuan/mt today. 

Zinc: A higher US dollar and expanding zinc inventories across LME warehouses lowered LME zinc 1.46% last Friday night, ending at $2,594/mt. Pressure above was found at the 10-day moving average. The premium of cash LME zinc over the three-month contract stood at a record high of $151/mt. Expectations of higher stocks will keep prices weak at $2,585-2,635/mt today. Potential output recovery in late-May will provide limit upward momentum in the SHFE 1907 contract, which is likely to trade at 20,680-21,180 yuan/mt today. 

Nickel: LME nickel stemmed increase at $12,135/mt as a higher US dollar depressed its upward momentum. It found support at $12,000/mt and ended more than 1% lower at $12,000/mt. The SHFE July contract relinquished gains from the daytime and closed 0.27% lower at 97,830 yuan/mt, as longs exited. We see it trading at 97,000-99,000 yuan/mt with LME nickel at $11,900-12,200/mt today. Spot prices are seen at 97,500-101,000 yuan/mt. 

Lead: LME lead extended its decline last Friday night and slid to a low of $1,814.5/mt. Support from the five-day moving average remained and settled it at $1,820.5/mt, down 0.6% on the day. The most-traded SHFE June contract dipped steeply to a low of 16,030 yuan/mt after SHFE lead inventories accumulated some 5,000 mt. It is expected to hover at lows with a trading range less than 200 yuan/mt today. 

Tin: LME tin continued to consolidate at lows around $19,460/mt as the US dollar strengthened. It settled at $19,475/mt with support from the 10-day moving average and resistance from the five-day moving average. The most-liquid September contract edged down 0.2% and ended at 145,420 yuan/mt. It may extend its rangebound trend today with support from 145,000 yuan/mt and pressure from 147,000 yuan/mt.