SMM Morning Comments (Jun 24)

SHANGHAI, Jun 24 (SMM) –

Copper: Prices of copper declined last Friday night as intensified US-Iran tensions and subdued US economic data depressed upward momentum in prices. Three-month LME failed to exceed $5,993/mt after it rebounded from a low of $5,928/mt, closing 0.21% lower at $5,959.5/mt. The most-liquid SHFE August contract also rallied after dropped, but failed to stand firm above 47,000 yuan/mt and lost 0.04% on the day to end at 46,830 yuan/mt. As the KDJ indicators expanded downward, a lack of technical support is likely to see the contract falling below the Bollinger middle band. Substantial progress in US-China trade talks could bolster prices, which are expected to gain limited support from the US dollar and oil prices. Today, the contract is seen trading at 46,500-47,000 yuan/mt, with its LME counterpart at $5,920-5,980/mt. An influx of seaborne materials may keep spot premiums at 20-80 yuan/mt today. 

Aluminium: Three-month LME aluminium failed to hold firm at a high of $1,780/mt as it fell below all moving averages to end at $1,768/mt, down 0.79% on the day. The most-traded SHFE August contract also slipped from a high of 13,815 yuan/mt and closed lower on the day at 13,770 yuan/mt as long covered their positions. Today, the contract is likely to trade at 13,700-14,000 yuan/mt with LME aluminium at $1,760-1,800/mt. Spot offers are seen flat to a premium of 20 yuan/mt today. 

Zinc: Three-month LME zinc continued to trend downward last Friday, but lower LME zinc inventories provided some support. It rebounded from a low of $2,428/mt, to around $2,440/mt, after LME inventories shrank, ending 1.32% lower on the day at $2,433/mt. As the KDJ indicators expanded downward, suggesting further downside room in prices, LME zinc is expected to test support from the Bollinger lower band, hovering at $2,410-2,460/mt today. The most-active SHFE August contract fell below support from the Bollinger lower band as fundamentals weakened by expectations of growing supplies in the short term. It lost 0.03% last Friday night and ended at 19,445 yuan/mt. Trading range today is seen at 19,250-19,750 yuan/mt. 

Nickel: As base metals ended mostly lower last Friday, three-month LME nickel fell close to 1.7%, finishing at $12,115/mt after hovering around $12,000/mt with pressure above. The most-traded SHFE August contract retreated after climbed above the daily moving average to 98,800 yuan/mt, ending 0.9% lower on the day at 98,350 yuan/mt. Today, we see the contract trading at 97,500-99,000 yuan/mt with LME nickel at $12,000-12,300/mt. Spot prices are likely at 98,000-100,000 yuan/mt. 

Lead: Three-month LME lead extended its rangebound trend at highs after it slid to a low of $1,885/mt, ending 0.21% higher at $1,908.5/mt last Friday night. The most-active SHFE was boosted by its LME counterpart and climbed from lows around 15,920 yuan/mt, but still ended 0.44% lower on the day at 15,975 yuan/mt. We see it trading rangebound with limited upside room today. 

Tin: Three-month LME tin unsuccessfully tested the $19,170/mt level after it rebounded from $18,960/mt, ending lower on the day at $18,955/mt. Pressure was seen from the 20-day moving average. It is expected to find support from $18,800/mt, with resistance from the 40-day moving average, or $19,400/mt today. The most-active SHFE September contract also closed lower at 144,000 yuan/mt, with pressure from the five-day moving average. We see it trading with support from 143,500 yuan/mt and resistance from the 20-day moving average, or the 144,500 yuan/mt level today.