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SMM Morning Comments (Jun 6)
Jun 6,2019 09:43CST
price review forecast
SMM Morning Comments


Copper: Longs’ selling at highs and a plunge in crude prices knocked three-month LME copper below the five-day moving average to a low of $5,789/mt on Wednesday before the contract finished the trading day 1.77% lower at $5,790/mt. The most traded SHFE July contract overnight followed LME copper lower, falling below the five-day moving average to close at 45,880 yuan/mt, down 1.23%. Open interest for all SHFE copper contracts expanded 14,688 lots overnight. The Fed's Beige Book reported modest growth in US economy in late spring, which is likely to support the greenback today and weigh on copper prices. LME copper is expected to trade between $5,780-5,830/mt today, with SHFE copper at 45,800-46,200 yuan/mt. Spot premiums are seen higher at 130-180 yuan/mt. Poorer spot trades are expected today amid risk aversion ahead of a long weekend.

Aluminium: A rebound in the US dollar forced three-month LME aluminium to relinquish earlier gains to close Wednesday 1.04% lower at $1,766.5/mt, near the lower Bollinger band. The loading up of short positions primarily accounted for the losses in LME aluminium on the day. LME aluminium is expected to trade between $1,760-1,820/mt today. The most active SHFE July contract, dragged by its LME counterpart, fell to a low of 14,000 yuan/mt overnight before it closed 0.25% lower at 14,030 yuan/mt. It is expected to trade between 13,900-14,200 yuan/mt today, with spot premiums of 10-30 yuan/mt over the June contract.

Zinc: Another sharp increase in the cancellation of LME zinc warrants bolstered three-month LME zinc to an intraday high of $2,498.5/mt on Wednesday before limited momentum caused the contract to erase all those gains to close the trading day 0.53% lower at $2,460/mt. It remained uncertain whether those cancelled warrants could be really moved amid a global downturn. LME zinc is unlikely to shrug off weak performance, and is expected to trade between $2,430-2,480/mt today. The most traded SHFE August contract climbed to a high of 20,070 yuan/mt overnight before it pared those gains to close at 19,905 yuan/mt. On the backdrop of rising production across Chinese smelters, social inventories are expected to rebound, which will prevent SHFE zinc from standing firmly above the 20,000 yuan/mt level today. The contract is expected to trade rangebound between 19,650-20,150 yuan/mt today.

Nickel: With lower crude prices and a firmer dollar, three-month LME nickel fell to four-month lows of $11,705/mt on Wednesday before it finished the trading day 0.72% lower at $11,715/mt. Also weighing on nickel were increases in stocks in LME-approved warehouses, which expanded 5,136 mt to 164,052 mt, marking the biggest daily gain in over a year. The most active SHFE July contract also declined overnight, falling below the low of May 24 when the contract registered a sharp gain and closing 0.99% lower at 95,380 yuan/mt. LME nickel is expected to trade between $11,650-11,750/mt today, with its SHFE counterpart at 94,700-95,700 yuan/mt. Spot prices are seen at 96,200-97,200 yuan/mt.

Lead: A change into backwardation with cash zinc and a decline of over 1,500 mt in inventories boosted three-month LME lead to a one-month high of $1,882/mt on Wednesday before longs profit-taking lowered it to close 0.62% higher at $1,857/mt. As LME lead came off from earlier highs, the most active SHFE July contract pared earlier gains to end marginally weaker at 16,010 yuan/mt overnight. SHFE lead have remained in current range for half a month, with upside room being further limited. This, together with downbeat signals from moving averages, grows the possibility of a decline from the current range.

Tin: Three-month LME tin was 0.31% weaker at $19,005/mt on Wednesday. Support is seen at $18,500/mt with resistance at $19,500/mt. The most traded SHFE September contract gave up earlier gains to close overnight marginally weaker at 143,150 yuan/mt. Support is seen at 142,000 yuan/mt while resistance is at 144,500 yuan/mt.

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