SMM Morning Comments (Jun 27)

SHANGHAI, Jun 27 (SMM) – 

Copper: A rebound in US dollar on eased expectations of US interest rate cuts depressed prices of copper, while higher oil prices provided some support. Three-month LME copper fell below the $6,000/mt level, to the lowest overnight at $5,963/mt, after the greenback gained. Bearish signs form the MACD indicators pointed to limited technical support in the most-liquid SHFE August contract. We see the contract trading between 46,800-47,300 yuan/mt today, with LME copper at $5,980-6,030/mt. Destocking inclinations across sellers are likely to keep spot offers at a discount of 10 yuan/mt to a premium of 60 yuan/mt today. 

Aluminium: Three-month LME aluminium retreated after pessimism around macroeconomic development bolstered prices to $1,838/mt, the highest since May 17. It ended 0.06% higher on the day at $1,814.5/mt, with shorts exiting. The most-traded SHFE August contract failed to stand above the 14,000 yuan/mt level as it stopped rising at 13,945 yuan/mt and finished at 13,880 yuan/mt. It is expected to hover between 13,800-14,100 yuan/mt today with LME aluminium at $1,790-1,840/mt. 

Zinc: A second consecutive day of increase in LME zinc inventories dragged on three-month LME zinc, which lost over half of the gains from the previous session, ending 1.32% lower at $2,500.5/mt. The most-active SHFE August contract faced pressure from the 20-day moving average, losing 0.72% on the day to end at 19,940 yuan/mt. Limited signs of improved consumption will keep the contract testing support from the 10-day moving average today, trading at 19,700-20,200 yuan/mt, with its LME counterpart at $2,475-2,525/mt. 

Nickel: Both three-month LME nickel and the most-traded SHFE August contract rallied more than 1% overnight as market sentiment improved. LME nickel shrugged off pressure from $12,450/mt to a high of $12,540/mt, ending up 1.58%, and its SHFE counterpart jumped to nearly a month high of 101,330 yuan/mt, closing over 1% higher. Today, the contract is expected to test resistance from the Bollinger upper band, or 101,500 yuan/mt, with LME nickel trading at $12,400-12,600/mt with support from the five-day moving average. 

Lead: Three-month LME lead retreated after rose, extending its rangebound trend and ending 0.65% lower at $1,919/mt. The most-active SHFE August contract consolidated around 16,180 yuan/mt after fell from a high of 16,220 yuan/mt. It lost 0.25% on the day to close at 16,185 yuan/mt. Pressure above from 16,300 yuan/mt will remain in the short term.  

Tin: Three-month LME tin failed to hold firm at $19,100/mt as short loaded up positions at highs and ended the prices at $18,850/mt. The most-liquid SHFE September contract dropped after climbed, and closed lower on the day at 143,590 yuan/mt. It is expected to test support from 143,500 yuan/mt, or 143,000 yuan/mt today, with its LME counterpart struggling above $18,800/mt.