SMM Morning Comments (May 21)

SHANGHAI, May 21 (SMM) – 

Copper: US-China trade tension triggered a buildup of shorts, which lowered LME copper by 0.39% to close at $6,033.5/mt and settled the SHFE July contract 0.23% lower at 47,630 yuan/mt. LME copper lost support from the five-day moving average. Weak support below is expected to keep it at $6,020-6,070/mt today, with the SHFE July contract at 47,500-48,000 yuan/mt. Lower futures prices and the delivery for long-term contracts bolstered spot trades, and this may keep spot premiums at 30-110 yuan/mt today. 

Aluminium: LME aluminium led the losses among base metals overnight as macroeconomic pressure dragged it to a low of $1,787/mt, and lowered it 2.29% to $1,789.5/mt. The SHFE July contract also settled lower at 14,250 yuan/mt as longs exited, despite higher costs in alumina and lower inventories of primary aluminium. It is expected to trade at 14,250~14,350 yuan/mt with LME aluminium at $1,790-1,820/mt today. 

Zinc: Trade concerns prevented LME zinc from exceeding the daily moving average, and depressed it to a low of $2,553/mt , before it rebounded and closed at $2,573/mt. Slower growth in the US dollar is likely to see a rebound in LME zinc today, but pressure from $2,600/mt will cap its upside room. The most-active SHFE July contract unsuccessfully tested resistance above. It finished lower at 20,605 yuan/mt after it rose to a high of 20,745 yuan/mt. With pressure from the five- and 10-day moving averages, it is expected to trade between 20,400-20,900 yuan/mt with LME zinc at $2,550-2,600/mt today.  

Nickel: LME nickel pared some losses as it rebounded above the 10-day moving average after dipped to a low of $11,875/mt. The most-traded July contract also rebounded from a low of 97,060 yuan/mt, with support from the 97,000 yuan/mt level. It still ended 0.15% lower on the day at 97,630 yuan/mt. We see it hovering at 96,500-98,500 yuan/mt, with LME nickel at $11,900-12,100/mt today. Spot prices are seen at 97,000-100,000 yuan/mt. 

Lead: Macroeconomic uncertainties extended declines in LME lead, which ended 1.04% lower at $1,801.5/mt after shorts weighed it to a low of $1,800/mt. The most-traded SHFE 1907 contract also slid as its LME counterpart weakened and market pessimism intensified. It lost 1.12% overnight to close at 15,930 yuan/mt. We see it testing support at the current level today. 

Tin: Lower prices of crude oil depressed LME tin, to a low of $19,330/mt, and settled it at $19,470/mt. Support is expected from the $19,000/mt level today. The SHFE September contract extended its rangebound trend at lows, with resistance from the five-day moving average. It is expected to test support from 145,000 yuan/mt, or 144,000 yuan/mt today.