SMM Morning Comments (Jul 2)

SHANGHAI, Jul 2 (SMM) – 

Copper: Prices of copper faced pressure overnight as US manufacturing data buoyed the greenback. A seasonal lull in China will continue to cap any upside room in copper prices. The most-traded SHFE August contract ended lower overnight, with its KDJ indicators expanding downwards and the MACD red line shortening. The bearish signs may keep the contract at 46,200-46,700 yuan/mt today, with three-month LME copper at $5,920-5,960/mt. Lower prices of futures may prompt spot sellers to hike premiums, to 50-100 yuan/mt today. 

Aluminium: Three-month LME aluminium fell to the lowest overnight at $1,790.5/mt and ended lower for the third consecutive trading day, at $1,791.5/mt, after it unsuccessfully tested pressure above from $1,811/mt twice. The most-liquid SHFE August contract remained below all moving averages as short loaded up their positions and dragged the contract to a low of 13,630 yuan/mt, before it ended 0.83% lower at 13,665 yuan/mt. It is seen hovering weakly around 13,600-13,800 yuan/mt with LME aluminium at $1,770-1,820/mt today. 

Zinc: Three-month LME zinc found temporary support from $2,500/mt after it slid from a high of $2,538/mt, but a stronger US dollar weighed it again, to a low of $2,450/mt before it ended 1.24% lower on the day at $2,462/mt. As macroeconomic optimism eased, fundamentals lowered the most-active SHFE August contract 1.31% overnight to end at 19,600 yuan/mt. Pressure above from the five-day moving average and limited, strong upward momentum will keep the contract at 19,400-20,000 yuan/mt, with LME zinc at $2,450-2,500/mt today. 

Nickel: Three-month LME nickel failed to receive support from lower LME inventories, as a strengthened US dollar drove it to lows of $12,270/mt and settled it at $12,325/mt, down 2.76% on the day. The most-traded SHFE August contract also extended its decline, ending lower at 98,750 yuan/mt. It is expected to test support from 98,000 yuan/mt, trading at 97,000-98,500 yuan/mt today, with its LME counterpart at $12,000-12,500/mt. Spot prices are likely at 98,000-100,000 yuan/mt. 

Lead: Three-month LME lead fell below support from several moving averages, and settled 0.85% lower overnight at $1,916.5/mt. Support from the 20-day moving average will remain today. The most-traded SHFE August contract lost nearly all the gains last night, ending up 0.03% at 16,140 yuan/mt, as a weaker LME lead depressed the contract from a high of 16,300 yuan/mt. Weak fundamentals may keep prices rangebound at current levels today. 

Tin: Three-month LME tin recovered a little after a higher US dollar dragged it to a low of $18,800/mt. It ended slightly higher on the day at $18,890/mt, with support expected from $18,600/mt today. The most-liquid SHFE September contract moved away from all moving averages as it slipped steeply to a low of 142,000 yuan/mt and finished at that level. It is expected to test support from 141,500 yuan/mt today.