SMM Morning Comments (Jun 3)

SHANGHAI, Jun 3 (SMM) –

Copper: Three-month LME copper fell for a third straight day on Friday May 31, losing 0.59% to close at $5,823.5/mt. The most active SHFE July contract relinquished earlier gains to close 0.43% lower at 46,160 yuan/mt on Friday night. Disappointing manufacturing  data from China, trade tensions between Washington and Beijing as well as recession fears damped market sentiment, and drove copper shorts to add and longs to cut their positions. LME copper is expected to trade between $5,790-5,840/mt today, with SHFE copper at 45,900-46,400 yuan/mt. Spot premiums are seen at 50-100 yuan/mt. The offloading inclination among spot sellers will be weaker as cash flow pressure eases at the start of the month, and purchases on lower prices of futures will improve trades. The inflows of imports in an open arbitrage window will grow downward pressure on spot premiums.

Aluminium: Three-month LME aluminium jumped to an intraday high of $1,811.5/mt on Friday before it erased some gains to end 0.73% higher at $1,794/mt. It is expected to trade between $1,770-1,820/mt today. The loading up of long positions bolstered the most traded SHFE July contract to a high of 14,220 yuan/mt on Friday night, before the contract gave up those gains to close flat at 14,150 yuan/mt. Lower alumina prices weighed on aluminium prices, while falling inventories offered support and kept SHFE aluminium rangebound. The contract is expected to trade between 14,100-14,300 yuan/mt today, with spot premiums at 10-30 yuan/mt over the June contract.

Zinc: Three-month LME zinc slipped on Friday, as an anticipated increase in supply and new economic recession fears drove shorts to load up their positions. The contract closed the trading day 1.33% lower at $2,525/mt. Near-term supply tightness is set to limit declines in LME zinc, which is likely to recover some ground today with most transactions at $2,500-2,550/mt. The most active SHFE July contract climbed to a high of 20,680 yuan/mt before it failed to touch the 20-day moving average and lost all those gains to close Friday night 0.65% lower at 20,590 yuan/mt. Open interest for the contract shrank 12,776 lots during the session. SHFE zinc is unlikely to shrug off its weak performance and will remain under the pressure from the five-day moving average today. The contract is expected to trade between 20,350-20,850 yuan/mt today.

Nickel: Three-month LME nickel fell 0.87% to close at $11,990/mt on Friday, and the most traded SHFE July contract pared earlier gains to end 0.9% lower at 97,650 yuan/mt on Friday night. LME nickel is expected to trade between $11,000-12,100/mt today, with its SHFE counterpart at 96,500-98,000 yuan/mt. Spot prices are seen at 98,000-99,000 yuan/mt.

Lead: Three-month LME lead fluctuated to finish 0.42% higher at $1,806.5/mt on Friday. It continued to hover at lows, without a clear direction, and macroeconomic uncertainties kept trades thin. LME lead is expected to remain rangebound in the short term. As shorts trimmed their positions, the most active SHFE July contract climbed on Friday night, gaining 0.12% to end at 16,080 yuan/mt. SHFE lead remained rangebound, and shorts appeared keen to leave at highs.

Tin: Three-month LME tin fell to a low of $18,585/mt before it rebounded to end 0.16% lower at $18,745/mt on Friday. A significantly weaker US dollar and an increase of 490 mt in LME tin inventories kept LME tin rangebound at lows. Support is seen at $18,500/mt while resistance is at $19,000/mt. The most traded SHFE September contract rapidly tumbled to a low of 142,750 yuan/mt shortly after Friday night’s opening bell before it recovered from those losses to close the session marginally higher at 143,150 yuan/mt. SHFE tin remained under all short-term moving averages. Support is seen at 142,000 yuan/mt while resistance is at 144,500 yuan/mt.