SMM Morning Comments (Jun 17)

SHANGHAI, Jun 17 (SMM) –

Copper: As shorts aggressively added their positions, three-month LME copper slipped to close 0.96% lower at $5,807.5/mt on Friday. The most active SHFE August contract followed its LME counterpart lower on Friday night, losing 0.75% to end at 46,110 yuan/mt. A stronger US dollar and weak Chinese economic data weighed on copper prices. Recent mine incidents might offer some support to prices. LME copper is expected to trade between $5,800-5,850/mt today, with its SHFE counterpart at 46,000-46,500 yuan/mt. Spot premiums are seen at lower 20-100 yuan/mt as the June contract is about to expire.

Aluminium: A stronger US dollar lowered three-month LME aluminium below all short-term moving averages to close at an intraday low of $1,758/mt on Friday. It lost all earlier gains to conclude in a weekly decline. LME aluminium is expected to trade between $1,750-1,830/mt today. A buildup of over 3,000 lots of short positions lowered the most traded SHFE August contract to the lowest since April 9 on Friday night. The contract then traded rangebound before it closed the session 0.47% lower at 13,855 yuan/mt, failing to recover from earlier losses. SHFE aluminium is expected to trade between 13,800-14,100 yuan/mt today, with spot premiums of up to 20 yuan/mt.

Zinc: Three-month LME zinc fell for a third straight day on Friday, reflecting weaker support from the backwardation structure. The contract pared earlier gains to close the trading day 0.83% lower at $2,455.5/mt, and we see limited upward momentum in it today. LME zinc is expected to trade at $2,430-2,480/mt. The most active SHFE August contract shed 0.89% to close at 19,955 yuan/mt on Friday night. Recent losses sent SHFE zinc on a downtrend, as recovering supplies and weaker consumption will grow inventories. SHFE zinc is expected to trade weakly at 19,700-20,100 yuan/mt today.

Nickel: Three-month LME nickel climbed to an intraday high of $12,065/mt on Friday before it shed some gains to close the trading day 0.63% higher at $11,920/mt. The SHFE July contract fluctuated to end Friday night 0.19% lower at 99,970 yuan/mt. LME nickel is expected to trade between $11,750-12,000/mt today, with SHFE nickel at 99,000-101,000 yuan/mt. Spot prices are seen at 99,000-101,000 yuan/mt.

Lead: As the greenback strengthened, three-month LME lead declined to a low of $1,864/mt on Friday before it recovered some ground to finish the trading day 1.03% lower at $1,873/mt. LME lead trended downwards after hitting the 60-day moving average, triggering the risks of a significant fall in the short run. The most active SHFE July contract initially rose to a high of 16,160 yuan/mt on Friday night before a weaker LME counterpart dragged on it to close the session 0.34% lower at 16,040 yuan/mt. SHFE lead continued to trade rangebound at lows, and it will not find a direction in the short term unless fundamentals change substantially.

Tin: Three-month LME zinc came off from an intraday high of $19,395/mt to close 0.62% lower at $19,215/mt on Friday. Resistance is seen from the 60-day moving average as high as $19,500/mt, while support is seen from the 10-day moving average as low as $19,150/mt. The most traded SHFE September contract initially slipped to a low of 144,350 yuan/mt on Friday night before it rebounded to the daily moving average and traded rangebound around that level to close the session 0.3% lower at 144,720 yuan/mt. Support is seen at 144,000 yuan/mt, while resistance is from the 40-day moving average as high as 145,700 yuan/mt.