SMM Morning Comments (Jun 20)

SHANGHAI, Jun 20 (SMM) –

Copper: Three-month LME copper shed 1.02% to end at $5,895/mt on Wednesday. The most active SHFE August contract pared earlier gains to close 0.26% lower at 46,710 yuan/mt overnight. LME copper opened higher this morning, as the US dollar weakened after the Fed disucssed a potential rate cut in the near term. But weak copper demand amid a global slowdown will limit steam in copper prices. Copper prices are likely to come off from earlier highs today. LME copper is expected to trade between $5,890-5,960/mt today, with SHFE copper at 46,400-46,900 yuan/mt. Spot premiums are seen firm at 20-80 yuan/mt as demand from long-term contracts and limited inflows of seaborne materials support sellers.

Aluminium: Three-month LME aluminium came off from a high of $1,788/mt to close a tad higher at $1,779/mt on Wednesday. LME aluminium is expected to trade between $1,750-1,820/mt today. The most traded SHFE August contract advanced 0.4% to end at 13,910 yuan/mt overnight. Macro positive developments buoyed SHFE aluminium, but pressure remains at the 14,000 yuan/mt level. The contract is likely to trade between 13,800-14,100 yuan/mt. Spot premiums are seen up to 20 yuan/mt over the July contract.

Zinc: A rebound in LME zinc inventories weighed on three-month LME zinc on Wednesday, which dropped 2% to close at $2,463/mt. It is expected to trade under pressure from the five- and 10-day moving averages today, and hover between $2,430-2,480/mt. The most active SHFE August contract followed its LME counterpart lower overnight, losing 1.2% to end at 19,820 yuan/mt. Pressure from the five-day moving average, a KDJ death cross and expectations for higher inventories signalled limited upward momentum in SHFE zinc, which is expected to trade rangebound under the pressure from the daily moving average today. Most transactions are seen at 19,550-20,050 yuan/mt.

Nickel: Three-month LME nickel climbed to a high of $12,180/mt on Wednesday before it finished the trading day 1.42% higher at $12,120/mt. The most traded SHFE August contract rose 0.44% to close at 99,820 yuan/mt overnight. LME nickel today is expected to trade rangebound above the 40-day moving average and the $12,000/mt level. SHFE nickel is likely to trade between 99,000-101,000 yuan/mt, with spot prices at 99,500-101,000 yuan/mt.

Lead: Three-month LME lead slid to a low of $1,880/mt on Wednesday after LME lead warrants expanded more than four times and bolstered it to a high of $1,933.5/mt. It then recovered some ground to close the trading day 0.76% lower at $1,902/mt. The $1,900/mt level will likely weigh on LME lead in the short run, but rising expectations of a US interest rate cut will keep the greenback in check and lend support to lead. The most active SHFE July contract followed its LME counterpart lower overnight, falling 0.62% to end at 16,140 yuan/mt. SHFE lead traded in a narrower range recently, and is slowly trending upwards. It is likely to test pressure from the 16,300 yuan/mt level. SHFE lead is expected to remain rangebound, with support from continued tightness in battery scrap supplies.  

Tin: Three-month LME tin rallied from a low of $18,750/mt on Wednesday to close the trading day 1.09% lower at $18,995/mt. Support is seen at $18,500/mt, while resistance is at the 40-day moving average as high as $19,300/mt. The most traded SHFE September contract partially recovered from a lower open to close 0.11% lower at 144,130 yuan/mt overnight. Support is seen at 143,500 yuan/mt, while resistance is from the five- and 20-day moving averages to a high of 144,400 yuan/mt.