SMM Morning Comments (Jul 3)

SHANGHAI, Jul 3 (SMM) – 

Copper: Falling prices of oil amid concerns about a global economic slowdown depressed copper prices overnight. Eased optimism around the resumption of US-China trade talks drove shorts to load up their positions, dragging the most-traded SHFE August contract to a low of 46,220 yuan/mt after it opened at lows of 46,520 yuan/mt. It has fallen below the Bollinger middle band as technical support wanes. Today, it is likely to trade at 46,000-46,500 yuan/mt with LME copper at $5,860-5,910/mt. Spot sellers are expected to firm up premiums to 50-120 yuan/mt as lower futures prices attract downstream purchases. 

Aluminium: As base metals mostly weakened overnight, three-month LME aluminium traded below the five- and 10-day moving averages, and finished 0.67% lower on the day at 1,779.5/mt. The most-active SHFE August contract stemmed its delcine at a low of 13,625 yuan/mt, and ended at that level, down 0.4% on the day. As the KDJ indicators continued to expand downwards, the contract may trade between 13,600-13,700 yuan/mt today, with its LME counterpart at $1,760-1,800/mt. 

Zinc: Three-month LME zinc found support from the Bollinger lower band as LME zinc inventories shrank. It recovered from a low of $2,434/mt, ending up 0.24% at $2,468/mt. Pressure from several moving averages above will limit its upward momentum and keep it at $2,430-2,480/mt today. The most-liquid SHFE August contract regained losses from earlier session overnight, as it bounced from a low of 19,525 yuan/mt and settled 0.31% higher at 19,675 yuan/mt. Pessimism about slow trades in a slack season will cap its upside room today. It is seen hovering at 19,350-19,850 yuan/mt today. 

Nickel: Three-month LME nickel tested the 40-day moving average below as it consolidated above the $12,000/mt level, with the lowest overnight at $12,060/mt. It lost 1.74% to end at $12,110/mt, and may test support from the daily moving average today, trading between $12,000-12,300/mt. The most-liquid SHFE August contract found support from 96,700 yuan/mt, but still settling lower on the day at 97,540 yuan/mt. Today, it is likely to consolidate around 97,000 yuan/mt. 

Lead: Three-month LME lead faced considerate pressure from the $1,900/mt level as it ended 1.46% lower overnight at $1,888.5/mt, after it dipped to a low of $1,883/mt. The most-traded SHFE August contract hovered between 16,000-16,300 yuan/mt and finished at 16,105 yuan/mt, down 0.49% on the day with open interests down 1,400 lots to 50,074 lots. Current fundamentals will keep prices weak today.

Tin: Three-month LME tin fell sharply overnight, ending at $17,675/mt after slipping to a low of $17,585/mt, pressed by lower oil prices and weaker SHFE tin. The most-traded SHFE September contract extended its decline below the daily moving average and settled at 130,690 yuan/mt, with a low of 127,780 yuan/mt. Support below is expected from 141,500 yuan/mt, with that for LME tin at $17,600/mt today.