SMM Morning Comments (May 22)

SHANGHAI, May 22 (SMM) – 

Copper: US-Sino trade uncertainy weighed LME copper below the $6,000/mt level, to a low of $5,989/mt. It rebounded but failed to stand firm above the daily moving average, ending 0.46% lower on the day at $6,006/mt. A lower LME copper depressed the most-active SHFE July contract from a high of 47,670 yuan/mt, but lower stocks across SHFE-approved warehouses provided some support to prices. The contract closed the trading day 0.57% lower at 47,440 yuan/mt. It is expected to trade at 47,200-47,600 yuan/mt with LME copper at $6,000-6,040/mt today. Spot deliveries for long-term contracts will buoy premiums to 60-140 yuan/mt today. 

Aluminium: LME aluminium dipped in the European session after it traded robustly in the Asian trading session. It regained losses from the previous day and ended 0.22% higher at $1,793.5/mt. We see it trading at $1,795-1,805/mt today. Higher costs of alumina will keep the most-active SHFE July contract at 14,150-14,200 yuan/mt today. 

Zinc: Continued pressure from US-China trade war depressed LME zinc to a low of $2,550/mt, after a decline in LME zinc inventories buoyed it above the daily moving average. Macroeconomic pessimism is likely to keep it at $2,550-2,600/mt today, with pressure from $2,600/mt. The five- and 10-day moving averages limited increase in the most-traded SHFE July contract, which ended flat at 20,650 yuan/mt. We see it hovering at 20,350-20,850 yuan/mt today. 

Nickel: LME nickel rebounded and closed 0.88% higher at $12,090/mt after a weaker copper dragged it to a low of $11,920/mt. The SHFE July contract received support from 97,000 yuan/mt and jumped above 98,000 yuan/mt, closing 0.1% higher at 98,020 yuan/mt. It is expected to trade at 97,000-99,000 yuan/mt with LME nickel at $11,900-12,200/mt today. Spot prices are seen at 97,000-101,000 yuan/mt. 

Lead: Strong performance by the SHFE 1907 contract pulled LME lead to end 0.47% higher at $1,810/mt, despite pressure from shorts. The July contract rose to a high of 16,145 yuan/mt, and closed 0.37% higher at 16,070 yuan/mt, as shorts exited. Further upside room is expected in the contract today if investors continue to cut short positions. 

Tin: LME tin traded rangebound around the five- and 20-day moving averages, with continued pressure from the 20-day moving average. The most-liquid SHFE September contract extended its weak trend with pressure from trade concerns. It is likely to consolidate with support from 145,000 yuan/mt, and resistance from 146,000 yuan/mt today.