SMM Morning Comments (Jul 9)

SHANGHAI, Jul 9 (SMM) – 

Copper: Upward momentum in copper prices remained limited as the US dollar held on to gains overnight and growth in oil prices slowed on expectations of lower demand. Three-month LME copper slid for four consecutive trading days, with pressure from the Bollinger middle band and bearish signs from the MACD indicators. The most-active SHFE September contract fell from a high of 46,320 yuan/mt as long investors took profits from recent gains. Open interests across all SHFE copper contracts lost over 4,000 lots as longs exited. Today, the contract is likely to trade at 46,000-46,500 yuan/mt, with LME copper at $5,850-5,900/mt. Spot premiums may stand lower from the previous day, at 40-100 yuan/mt today.  

Aluminium: Three-month LME aluminium fell to a low of $1,796/mt after it unsuccessfully tested pressure from $1,810/mt. It ended flat overnight at $1,804.5/mt, and may hover between $1,780-1,850/mt with limited upward momentum today. The most-liquid SHFE August contract consolidated around 13,785 yuan/mt, with a high of 13,800 yuan/mt, and ended 0.11% higher at 13,785 yuan/mt. It is expected to trade at 13,700-13,850 yuan/mt today. 

Zinc: Three-month LME zinc registered the fourth consecutive trading day of decline as support from fundamentals weakened on eased zinc shortages. LME zinc cash over the three-month contract moved to a discount of $3/mt, from a premium of $9.5/mt in the previous session, indicating a better-supplied market. The most-liquid SHFE September contract nudged  0.18% higher and closed at 19,170 yuan/mt, as zinc social inventories shrank over the weekend. Weak fundamentals will keep it around 18,900-19,400 yuan/mt, with its LME counterpart at $2,360-2,410/mt today. 

Nickel: Three-month LME nickel shrugged off pressure from the $12,700/mt level and closed at $12,710/mt, up 1.97% on the day as LME nickel inventories decreased by 2,724 mt to 154,740 mt overnight. The most-traded SHFE August contract climbed above 100,000 yuan/mt to end up 1.51% at 100,730 yuan/mt. With pressure from the Bollinger upper band, the contract is expected to hover at 100,000-120,000 yuan/mt, with LME nickel at $12,600-12,800/mt today. 

Lead: Three-month LME lead rallied and closed 0.8% higher on the day, at $1,892/mt, after it lost all the gains from earlier trades overnight. It may continue to test pressure from $1,900/mt today. The most-traded SHFE August contract extended its decline overnight, as shorts aggressively loaded up their positions, pushing the contract 0.53% lower at 15,905 yuan/mt. Production cuts across secondary smelters in Guizhou on environmental probes may provide some support to prices. 

Tin: Three-month LME tin regained earlier losses overnight as it bounced from a low of $18,260/mt, ending up 1.01% at $18,465/mt. The most-traded SHFE September contract also climbed after fell, finishing 0.41% higher at 136,150 yuan/mt. It will face pressure above from the 10-day moving average, or the 136,150 yuan/mt level today, with LME tin testing resistance from $18,500/mt.