SMM Morning Comments (Jun 25)

SHANGHAI, Jun 25 (SMM) – 

Copper: A lower US dollar amid rising expectations of interest rate cuts by the US Federal Reserve kept prices of copper testing pressure above. As long loaded up their positions, three-month LME copper climbed to a high of $5,976/mt, and ended higher on the day at $5,965/mt. Upward momentum in the most-traded SHFE August contract waned after it jumped to a high of 46,890 yuan/mt. It settled at 46,810 yuan/mt. Intensified tension between the US and Iran grew expectations of tighter supply of crude oil, and this also provided support to copper prices. Today, the contract is likely to trade between 46,600-47,050 yuan/mt, with its LME counterpart at $5,960-6,010/mt. Downstream demand for spot cargoes with invoices for June will keep spot premiums firm at 20-80 yuan/mt. 

Aluminium: Three-month LME aluminium shrugged off pressure from the $1,800/mt level as most base metals rose on a lower US dollar overnight. LME aluminium expanded 1.81% to finish at $1,800/mt, and may trade at $1,780-1,830/mt today. The most-active SHFE August contract received support from longs and closed higher last night at 13,890 yuan/mt. It is expected to trade at 13,800-14,100 yuan/mt, with spot premiums up to 20 yuan/mt today. 

Zinc: As the US dollar weakened, three-month LME zinc rallied and gained 2.34% overnight to close at $2,490/mt. Lower LME zinc inventories also buoyed prices. With support from the Bollinger middle band, LME zinc is expected to trade at $2,470-2,520/mt today. The most-liquid SHFE August contract also strengthened to the Bollinger lower band, as an unexpected decline in social inventories of refined zinc drove shorts to exit. It advanced 1.15% to end at 19,810 yuan/mt, with open interests down 10,800 lots to 296,000 lots. However, thin trades in the spot market may depress the upward momentum and keep the contract at 19,650-20,150 yuan/mt today. 

Nickel: Both three-month LME nickel and the most-active SHFE August contract found support from the daily moving averages and rebounded to close higher last night. LME nickel gained 0.6% to end at $12,190/mt after it climbed from a low of $12,015/mt to the highest overnight at $12,230/mt. The SHFE 1908 contract stopped its decline at 98,130 yuan/mt and rallied to end 0.4% higher on the day at 98,920 yuan/mt. With support from the 20-day moving average, the contract is expected to trade between 98,500-100,000 yuan/mt with LME nickel at $12,150-12,300/mt today. Spot prices are seen at 98,500-100,000 yuan/mt. 

Lead: Three-month LME lead continued to hover at highs as it rebounded near closing and ended 0.31% higher on the day at $1,914.5/mt. The most-active SHFE August contract finished the trading day 1.06% higher at 16,205 yuan/mt. Pressure above prevented it from exceeding 16,290 yuan/mt. This, together with limitedly changed fundamentals, may cap any upside room in the contract today. 

Tin: Three-month LME tin regained losses from early sessions as it rebounded from a low of $18,685/mt and closed at $19,035/mt. With resistance from the 20-day moving average or the $19,200/mt level, it is likely to test support from $18,800/mt, or $18,500/mt today. The most-liquid SHFE September contract traded rangebound within 143,600-143,700 yuan/mt after recovered from a low of 143,550 yuan/mt. It is seen hovering with support from 143,500 yuan/mt, and pressure from the 10-day moving average, or 144,000 yuan/mt today.