SMM Morning Comments (May 28)-Shanghai Metals Market

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SMM Morning Comments (May 28)

Price Review & Forecast 10:04:45AM May 28, 2019 Source:SMM

SHANGHAI, May 28 (SMM) –

The London Metal Exchange closed on Monday for the Spring Bank Holiday.

Copper: As a rally in the US dollar prompted longs to cover positions, the most traded SHFE July contract came off from a high of 47,340 yuan/mt to 47,180 yuan/mt before it recovered some ground to close overnight 0.25% higher at 47,270 yuan/mt. While LME copper broke through $6,000/mt shortly after this morning’s opening bell, following gains in its SHFE counterpart on Monday, copper prices are likely to see limited upside given macroeconomic and fundamental weaknesses. LME and SHFE copper now stand above their five-day moving averages. LME copper is expected to trade between $5,970-6,020/mt today with SHFE copper at 47,000-47,500 yuan/mt. Spot prices are seen lower at a discount of 20 yuan/mt to a premium of 50 yuan/mt, due to poor trades. Higher prices of futures will erode purchasing interest among downstream consumers, while month-end cash flow issues grow the offloading inclination among sellers.

Aluminium: After a loading up of short positions dragged the most active SHFE July contract lower, the contract traded rangebound to finish overnight session 0.07% weaker at 14,275 yuan/mt. The contract is expected to trade rangebound between 14,250-14,350 yuan/mt today as the market has priced in the earlier-than-anticipated shutdown of Shenhuo’s plant in Yongcheng. Spot premiums are seen up to 40 yuan/mt,

Zinc: The most traded SHFE July contract rapidly climbed to 20,795 yuan/mt on a short-covering overnight before it hovered around 20,720 yuan/mt to close the session 2.04% higher at 20,730 yuan/mt. Despite an increase in production across smelters, social inventories in China continued to fall, which offered support to SHFE zinc. Resistance from the 21,000 yuan/mt level is expected to cap gains in SHFE zinc. The contract is expected to trade between 20,450-20,950 yuan/mt today. Three-month LME zinc is expected to perform strongly today after returning from a long weekend. Zinc stocks across LME-approved warehouses declined despite a record-high backwardation, and this lowered expectations for more deliveries to warehouses and will bolster the market. Transactions today are likely to occur at $2,565-2,615/mt.

Nickel: As longs took profits, the most active SHFE July contract pared some gains after hitting a high of 101,570 yuan/mt. It then traded rangebound to close overnight session 0.37% higher at 100,900 yuan/mt, with support from the 100,500 yuan/mt level and pressure from the daily moving average. LME nickel is expected to trade between $12,300-12,500/mt today, with SHFE nickel at 100,000-102,000 yuan/mt. Spot prices are seen at 99,500-103,000 yuan/mt.

Lead: The most active SHFE July contract fluctuated around the daily moving average to finish overnight 0.49% lower at 16,110 yuan/mt. A sharp decline on Monday afternoon sent SHFE lead back to the previous range. The contract is expected to trade rangebound in the short run.

Tin: The most traded SHFE September contract inched up overnight as longs added their positions. It finished the session 0.52% higher at 145,650 yuan/mt. Support is seen at 143,500 yuan/mt, with resistance at 146,000 yuan/mt.

Key Words:  Morning comments  Copper  Aluminium  Zinc  Lead  Nickel  Tin 

SMM Morning Comments (May 28)

Price Review & Forecast 10:04:45AM May 28, 2019 Source:SMM

SHANGHAI, May 28 (SMM) –

The London Metal Exchange closed on Monday for the Spring Bank Holiday.

Copper: As a rally in the US dollar prompted longs to cover positions, the most traded SHFE July contract came off from a high of 47,340 yuan/mt to 47,180 yuan/mt before it recovered some ground to close overnight 0.25% higher at 47,270 yuan/mt. While LME copper broke through $6,000/mt shortly after this morning’s opening bell, following gains in its SHFE counterpart on Monday, copper prices are likely to see limited upside given macroeconomic and fundamental weaknesses. LME and SHFE copper now stand above their five-day moving averages. LME copper is expected to trade between $5,970-6,020/mt today with SHFE copper at 47,000-47,500 yuan/mt. Spot prices are seen lower at a discount of 20 yuan/mt to a premium of 50 yuan/mt, due to poor trades. Higher prices of futures will erode purchasing interest among downstream consumers, while month-end cash flow issues grow the offloading inclination among sellers.

Aluminium: After a loading up of short positions dragged the most active SHFE July contract lower, the contract traded rangebound to finish overnight session 0.07% weaker at 14,275 yuan/mt. The contract is expected to trade rangebound between 14,250-14,350 yuan/mt today as the market has priced in the earlier-than-anticipated shutdown of Shenhuo’s plant in Yongcheng. Spot premiums are seen up to 40 yuan/mt,

Zinc: The most traded SHFE July contract rapidly climbed to 20,795 yuan/mt on a short-covering overnight before it hovered around 20,720 yuan/mt to close the session 2.04% higher at 20,730 yuan/mt. Despite an increase in production across smelters, social inventories in China continued to fall, which offered support to SHFE zinc. Resistance from the 21,000 yuan/mt level is expected to cap gains in SHFE zinc. The contract is expected to trade between 20,450-20,950 yuan/mt today. Three-month LME zinc is expected to perform strongly today after returning from a long weekend. Zinc stocks across LME-approved warehouses declined despite a record-high backwardation, and this lowered expectations for more deliveries to warehouses and will bolster the market. Transactions today are likely to occur at $2,565-2,615/mt.

Nickel: As longs took profits, the most active SHFE July contract pared some gains after hitting a high of 101,570 yuan/mt. It then traded rangebound to close overnight session 0.37% higher at 100,900 yuan/mt, with support from the 100,500 yuan/mt level and pressure from the daily moving average. LME nickel is expected to trade between $12,300-12,500/mt today, with SHFE nickel at 100,000-102,000 yuan/mt. Spot prices are seen at 99,500-103,000 yuan/mt.

Lead: The most active SHFE July contract fluctuated around the daily moving average to finish overnight 0.49% lower at 16,110 yuan/mt. A sharp decline on Monday afternoon sent SHFE lead back to the previous range. The contract is expected to trade rangebound in the short run.

Tin: The most traded SHFE September contract inched up overnight as longs added their positions. It finished the session 0.52% higher at 145,650 yuan/mt. Support is seen at 143,500 yuan/mt, with resistance at 146,000 yuan/mt.

Key Words:  Morning comments  Copper  Aluminium  Zinc  Lead  Nickel  Tin