SMM Morning Comments (Jul 1)

SHANGHAI, Jul 1 (SMM) – 

Copper: China and the US' agreement for future negotiations at the G-20 Summit will provide upward momentum in copper prices. Improved market sentiment is expected to offset technical pressure from the 40-day moving average and the downwardly expanded KDJ indicators for the most-traded SHFE August contract. Today, three-month LME copper is likely to trade at $6,010-6,060/mt, with the SHFE August contract at 47,000-47,500 yuan/mt. Expectations of a pickup in spot purchases at the start of a month will keep sellers firming up offers, to a premium of 10-60 yuan/mt today. 

Aluminium: Three-month LME aluminium failed to stand firm at a high of $1,812.5/mt and lost all the gains at closing, ending 0.14% lower at $1,794/mt. The most-liquid SHFE August contract fell for the fourth consecutive day as it ended 0.25% lower at 13,795 yuan/mt last Friday night, below all moving averages. A cease-fire in the US-China trade war is expected to rally prices today, with the contract at 13,800-14,000 yuan/mt and LME aluminium at $1,790-1,850/mt. Spot offers are likely at a discount of 10 yuan/mt to a premium of 20 yuan/mt. 

Zinc: A weaker US dollar and trade hopes buoyed three-month LME zinc to a high of $2,500/mt, after pressure from the 20-day moving average drove it to a low of $2,470.5/mt. It ended 0.26% higher at $2.493/mt. Slower-than-expected growth in social inventories of refined zinc also rallied the most-active SHFE August contract, which tested the 20-day moving average above and finished 0.51% higher at 19,875 yuan/mt. An appreciating yuan may limit the upside room in the contract, and keep it at 19,850-20,350 yuan/mt today, with LME zinc at $2,490-2,540/mt. 

Nickel: Three-month LME nickel closed lower after four consecutive trading days of increase, as it fell from a high of $12,775/mt. The K-indicator remained above the Bollinger upper band. The most-traded SHFE August contract also slid after rose to a high of 102,260 yuan/mt, ending lower at 101,390 yuan/mt, as longs took profit and left. Today, it is expected to test resistance from the Bollinger upper band, or 102,000 yuan/mt, with LME nickel testing support from the $12,600/mt level, at $12,600-13,000/mt. 

Lead: Three-month LME lead opened at highs of $1,940/mt amid improved macroeconomic sentiment. It rebounded after dipped to a low of $1,925.5/mt, ending 0.36% lower at $1,933/mt. The most-active SHFE August contract found strong support from 16,000 yuan/mt, and closed 0.25% higher at 16,070 yuan/mt after rose to a high of 16,100 yuan/mt. Uncertainties around macroeconomic development will keep prices rangebound today. 

Tin: Three-month LME tin recovered after fell below the daily moving average to a low of $18,765/mt, and finished at $18,800/mt. Pressure from the five-day moving average and expanding shorts dragged the most-liquid SHFE September contract to a low of 141,850 yuan/mt, before it ended at 142,150 yuan/mt. It is expected to test support from 141,500 yuan/mt today, with LME tin struggling above $18,600/mt.