SMM Morning Comments (Jun 11)

Published: Jun 11, 2019 09:34
SMM Morning Comments

SHANGHAI, Jun 11 (SMM) –

Copper: An aggressive load-up of long positions bolstered three-month LME copper to a high of $5,881/mt on Monday before the contract finished the trading day 1.46% higher at $5,877/mt. As a stronger LME copper fuelled confidence among longs in Shanghai, the most traded SHFE August contract climbed to a high of 46,640 yuan/mt overnight before it closed 0.74% higher at 46,570 yuan/mt. The US-Mexico trade discussion and upbeat Chinese trade data boosted market sentiment, and lifted copper prices. Copper prices, however, continue to face the headwind from a generally strong US dollar. LME copper is expected to trade between $5,850-5,900/mt today, with SHFE copper at 46,300-46,800 yuan/mt. Spot premiums are seen lower at 80-150 yuan/mt as inflows of imports and higher prices of futures will drive sellers to lower their offers.

Aluminium: Three-month LME aluminium rebounded from an intraday low of $1,752.5/mt to close 0.94% higher at $1,777/mt on Monday. The loading up of long positions primarily accounted for the gain on the day. LME aluminium is expected to trade between $1,760-1,820/mt today. As longs added their positions, the most active SHFE July contract climbed to a high of 14,015 yuan/mt overnight before it closed 0.29% higher at 13,995 yuan/mt. It is expected to trade at 13,800-14,100 yuan/mt today, with spot premiums of 10-30 yuan/mt over the June contract.

Zinc: Resistance from the 10-day moving average and an increase of 875 mt in LME zinc inventories on Monday dragged three-month LME zinc from highs of $2,511/mt to close the trading day 0.4% lower at $2,475/mt. LME zinc is expected to remain weak today and test support from the five-day moving average, with most transactions at $2,460-2,510/mt. The most traded SHFE August contract partially recovered from earlier losses to end 0.35% lower at 20,180 yuan/mt overnight. Firm backwardation is likely to offer support to SHFE zinc, while the anticipation of higher inventories on greater supplies from Chinese smelters will likely erode upward momentum in prices. SHFE zinc is expected to consolidate between 20,000-20,500 yuan/mt today.

Nickel: Three-month LME nickel climbed to an intraday high of $11,850/mt on Monday before it relinquished much of those gains to close the trading day a tad higher at $11,625/mt. The SHFE July contract fluctuated to close 0.54% lower at 95,760 yuan/mt overnight. LME nickel is expected to trade between $11,600-11,750/mt today, with SHFE counterpart at 95,500-97,000 yuan/mt. Spot prices are seen at 96,500-98,000 yuan/mt.

Lead: Three-month LME lead recovered from earlier losses and stood above the 40-day moving average on Monday, gaining 2.2% to close at $1,881/mt. Open interest for the contract shrank 2,424 lots to 114,914 lots. It is expected to test pressure from $1,900/mt in the short term. The most active SHFE July contract opened higher at 16,300 yuan/mt overnight, but pared some gains to close 0.56% up at 16,235 yuan/mt. Investors appeared keen to sell off above 16,300 yuan/mt. This grows the possibility of a pull-back in SHFE lead if it fails to significantly gain to move out of its current range in the short run.

Tin: Three-month LME tin rallied from an intraday low of $19,100/mt to an intraday high of $19,285/mt on Monday before it erased those gains to close 0.26% lower at $19,200/mt. Support is seen at $18,700/mt while resistance is at $19,500/mt. The most traded SHFE September contract rose to a high of 144,920 yuan/mt overnight and hovered around the daily moving average to finish the session 0.73% higher at 144,740 yuan/mt. Support is seen at 143,500 yuan/mt while resistance is at 146,000 yuan/mt.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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