SMM Morning Comments (Jul 11)

SHANGHAI, Jul 11 (SMM) – 

Copper: Prices of copper rallied overnight as the US dollar slid on US Federal Reserve Chairman’s comments about potential interest rate cuts. Oil prices climbed after the US crude supplies fell more than expected, and this also boosted copper. Three-month LME copper expanded 2.44%, with its SHFE counterpart rising 1.66%. However, concerns about the global economic downturn will cap upward room in prices, and keep LME copper at $5,920-5,970/mt, with the SHFE September contract at 46,400-46,800 yuan/mt today. Higher futures prices may depress spot trades, with premiums expected at 50-110 yuan/mt today.

Aluminium: As the US dollar weakened, three-month LME aluminium advanced 1.62% to finish at $1,850/mt, after climbed above all the moving averages to highs around $1,852.5/mt. As the KDJ indicators expanded upwards and the MACD red line lengthened, prices are likely to hover around $1,800-1,860/mt today. The most-active SHFE August contract rose above the 20-day moving average to close at 13,905 yuan/mt, up 1.05% on the day as investors covered their shorts. The contract is expected to remain at highs of 13,800-13,950 yuan/mt today.  

Zinc: Three-month LME zinc shrugged off pressure from the daily moving average but stopped rising at $2,405/mt, finishing 1.52% higher at that level. It is likely to trade at $2,370-2,420/mt today, as fundamentals remained unchanged amid sluggish consumption. The most-active SHFE September contract returned around 19,000 yuan/mt on improved macroeconomic sentiment, ending higher at 19,175 yuan/mt. It is expected to trade between 18,850-19,350 yuan/mt today.  

Nickel: Three-month LME nickel rose to nearly the highest in three months as a lower US dollar lifted it to a high of $13,030/mt. It closed at $13,015/mt, up 2.08% on the day. Limited pressure above may see it hovering around $13,000/mt today. The most-liquid SHFE August contract found support from the 102,000 yuan/mt level, ending up 1.3% at 102,630 yuan/mt. It is expected to consolidate within the Bollinger upper band, around 103,000 yuan/mt today. 

Lead: Three-month LME lead rose for the third consecutive trading day as it climbed to a high of $1,964.5/mt and closed 1.03% higher at $1,958/mt. Further upward momentum is expected in the short term. The most-active SHFE August contract also regained previous losses and expanded 1.32% to end at 16,095 yuan/mt. Investors should remain cautious about prices falling from highs as fundamentals barely improve. 

Tin: Prices of tin received limited support from a lower US dollar, as longs continued to exit and dragged three-month LME tin 0.36% lower at $18,165/mt, with the most-active SHFE September contract losing 0.04% to close at 136,110 yuan/mt. Today, LME tin is expected to test support from $18,000/mt, and the SHFE September contract may struggle above 135,000 yuan/mt.