SMM Morning Comments (Jun 21)

Published: Jun 21, 2019 09:27
SMM Morning Comments

SHANGHAI, Jun 21 (SMM) –

Copper: As shorts built up positions, three-month LME copper came off from one-month high of $6,027/mt to close 1.31% higher at $5,972/mt on Thursday. The most traded SHFE August contract also pulled back overnight, erasing earlier gains to close marginally lower at 46,820 yuan/mt. While the market appeared to have digested the Fed’s interest rate cut hint, stronger crude oil prices, driven by US-Iran tensions, will lend support to copper. LME copper is expected to trade between $5,930-6,000/mt today, with SHFE copper at 46,500-47,000 yuan/mt. Spot premiums are seen firm at 20-80 yuan/mt as sellers and downstream buyers remain locked in a stalemate.

Aluminum: Three-month LME aluminium pulled back from an earlier high of $1,807.5/mt to finish the trading day 0.17% higher at $1,782/mt on Thursday. This reflected strong resistance from the $1,800/mt level. LME aluminium is expected to trade between $1,760-1,820/mt today. As shorts added and longs cut their positions, the most active SHFE August contract slipped overnight, losing 0.36% to end at 13,835 yuan/mt. It is expected to trade between 13,700-14,000 yuan/mt today, with spot premiums of up to 20 yuan/mt over the July contract.

Zinc: Resistance from the $2,500/mt line forced three-month LME zinc to give up earlier gains to close a tad higher at $2,465.5/mt on Thursday. Despite support from the expectations of lower US interest rates, the anticipation of greater supplies continued to weigh on LME zinc. Weaker cash premiums also eroded steam in LME zinc, which is expected to trade between $2,450-2,500/mt today, with strength at lows under scrutiny. As shorts aggressively loaded up their positions, the most liquid SHFE August contract fell 0.81% to end at 19,675 yuan/mt overnight. Spreads between SHFE zinc contracts narrowed after the delivery. Pessimistic consumption outlook and growing supplies drove the expectations for higher inventories, which kept SHFE zinc under pressure. The contract is expected to trade weakly at 19,550-20,050 yuan/mt today.

Nickel: Three-month LME nickel climbed to a high of $12,390/mt on Thursday before it pared some gains to close the trading day 1.69% higher at $12,325/mt. LME nickel inventories shrank 1,002 mt to 16,936 mt. The most traded SHFE August contract reversed earlier gains to close 0.31% lower at 99,450 yuan/mt overnight. LME nickel is expected to trade between $12,100-12,450/mt today, with its SHFE counterpart at 99,000-101,000 yuan/mt. Spot prices are seen at 99,500-101,000 yuan/mt.

Lead: Three-month LME lead shed earlier gains to close 0.13% higher at $1,904.5/mt on Thursday, and its moving averages have been lifted by recent gains. The movement in the US dollar and potential actions from institutional investors after sharply increased cancelled warrants would be key to LME lead. The most active SHFE August contract slid 0.31% to close at 16,070 yuan/mt overnight. The two-day drop has put SHFE lead on track for a weekly decline.  

Tin: A sharp fall in the greenback and an advance in oil prices bolstered three-month LME tin to a high of $19,325/mt on Thursday, before the contract pared some gains to finish the trading day 0.68% higher at $19,125/mt. Support is seen at $18,800/mt, while resistance is from the 40-day moving average as high as $19,400/mt. The most traded SHFE September contract opened higher overnight, and gained 0.38% to end at 144,490 yuan/mt. Support is seen at 143,500 yuan/mt, while resistance is at 145,000 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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SMM Morning Comments (Jun 21) - Shanghai Metals Market (SMM)