SMM Morning Comments (Jul 8)

SHANGHAI, Jul 8 (SMM) – 

Copper: Better-than-expected US non-farm payroll data bolstered the US dollar, which depressed copper prices last Friday night. Sluggish demand for copper in a slack season will keep prices rangebound and weak in the short term. With pressure from the five-day moving average and a lengthening MACD green line, the most-liquid SHFE September contract is likely to trade at 46,200-46,500 yuan/mt, with its LME counterpart at $5,890-5,930/mt. Spot premiums are likely to stay at 60-140 yuan/mt as the market awaits an inflow of seaborne copper. 

Aluminium: Three-month LME aluminium rebounded after a higher US dollar drove it to a low of $1,791/mt, but it failed to exceed $1,807/mt, and closed 0.28% lower on the day at $1,804.5/mt. The most-active SHFE August contract stabilised after it fell below all moving averages right after opening. It ended 0.07% lower at 13,795 yuan/mt, and may trade between 13,700-13,850 yuan/mt today. LME aluminium is likely to trade at $1,770-1,820/mt today.   

Zinc: Three-month LME zinc consolidated at the Bollinger lower band with a high of $2,430/mt, after LME zinc inventories posted declines. It still ended lower, for the third consecutive trading day, as supply tightness eased. The most-traded SHFE August contract hovered around the Bollinger lower band, and stemmed declines at the daily moving average, ending up 0.13% at 19,320 yuan/mt. Expectations of a greater supply will keep the contract weak at 19,100-19,600 yuan/mt, with LME zinc at $2,380-2,430/mt today. 

Nickel: While LME base metals mostly fell on a stronger US dollar, three-month LME nickel found support from the daily moving average, or the $12,300/mt level, and climbed to a high of $12,480/mt, ending up 0.69% at $12,465/mt. Today, it will test support from the 10-day moving average and likely hold firm above $12,400/mt. The most-liquid SHFE August contract exceeded the 99,000 yuan/mt level and finished higher on the day at 99,250 yuan/mt. The contract is likely to test support from the five-day moving average and resistance from 100,000 yuan/mt today.

Lead: Three-month LME lead fell to a low of $1,861/mt after the US dollar strengthened, ending lower for the fifth consecutive day, at $1,877/mt. It will test support from $1,850/mt today as support from the 40-day moving average remained. The most-active SHFE August contract hovered in a broad range last Friday night, and ended 0.44% lower at 15,985 yuan/mt. It will extend a rangebound trend and test support below today.  

Tin: Three-month LME tin retreated after rose, as shorts loaded up their positions at a high of $18,400/mt, dragging prices to close at a low of $18,280/mt. The most-liquid SHFE September contract hovered above the 134,000 yuan/mt level and settled slightly higher on the day at 134,080 yuan/mt, remaining below all moving average. It is likely to test resistance from 134,600 yuan/mt, with LME tin facing pressure from $18,500/mt today.