SMM Morning Comments (May 24)

SHANGHAI, May 24 (SMM) – 

Copper: A lower US dollar drove longs to enter and buoyed prices of copper. However, existing threat from the US-China trade war will cap their upside room today. LME copper rallied from a low of $5,880/mt, and closed 0.18% higher at $5,942/mt, after it jumped to a high of $5,947/mt. Open interests expanded 5,137 lots to 298,000 lots. The most-active July contract advanced to a high of 46,900 yuan/mt after it hovered around 46,680 yuan/mt. It is expected to trade at 46,500-47,000 yuan/mt, with LME copper at $5,900-5,960/mt today. Spot premiums are likely to firm up at 50-100 yuan/mt as downstream consumers purchase ahead of the weekend. 

Aluminium: A decline of 8,600 mt in stocks across LME-approved warehouses bolstered LME aluminium, to a high of $1,798/mt. It ended 0.84% higher on the day at $1,796/mt. Fundamentals continued to support the SHFE 1907 contract, which climbed 0.39% to finish at 14,165 yuan/mt. It is seen trading at 14,150-14,250 yuan/mt, with LME aluminium at $1,790-1,810/mt today. 

Zinc: Disappointing economic data concerned investors and dragged on prices of zinc. LME zinc dipped to the lowest overnight at $2,506.5/mt, before it rebounded to around $2,520/mt as LME zinc stocks stemmed increase. It ended 0.79% lower at $2,526/mt, below all moving averages. Expectations of higher supplies prevented the most-active SHFE July contract from exceeding 20,175 yuan/mt. It tested support from the 20,000 yuan/mt level and closed lower on the day at 20,125 yuan/mt. We see it hovering weakly at 20,000-20,500 yuan/mt with LME zinc at $2,500-2,550/mt today. 

Nickel: Macroeconomic pessimism drove LME nickel to end 0.67% lower at $11,890/mt. The SHFE 1907 contract rebounded after shorts weighed it below the daily moving average, to a low of 96,100 yuan/mt. It still closed lower on the day at 96,500 yuan/mt. Today, it is expected to trade at 95,500-97,000 yuan/mt with LME nickel at $11,800-12,000/mt. Spot prices are seen at 96,500-98,000 yuan/mt. 

Lead: Improved sentiment around fundamentals continued to support lead prices and saw LME lead rebounding and finishing 0.53% higher at $1,815.5/mt. The most-traded SHFE July contract climbed to a high of 16,195 yuan/mt and closed 0.28% higher at 16,175 yuan/mt. Eased pressure from shorts may keep prices robust today.  

Tin: LME tin retreated after an increase to a high of $19,390/mt as trade worries loomed over the market. It closed 0.16% lower on the day at $19,345/mt, with its SHFE counterpart losing 0.22% and ending at 144,200 yuan/mt. Today, we expect LME tin to extend the rangebound trend with support from $19,100/mt. The SHFE September contract may find support from 144,000 yuan/mt.