SMM Morning Comments (Jul 12)

SHANGHAI, Jul 12 (SMM) – 

Copper: Prices of copper hovered at highs as the US dollar weakened on dovish comments by the Federal Reserve Chairman Jerome Powell. Three-month LME copper traded around the $5,940/mt level, and its SHFE counterpart around 46,600 yuan/mt. There is further upward momentum expected in prices today. LME copper is likely to trade between $5,930-5,970/mt, with the most-active SHFE September contract at $46,400-46,800/mt today. Spot sellers are expected to hold offers firm at a premium of 60-120 yuan/mt today as the delivery day approaches, even though high futures prices sidelined downstream consumers.

Aluminium: Three-month LME aluminium cut gains from the previous trading day as it fell to a low of $1,820/mt and ended 1.57% lower on the day at $1,821/mt, with pressure from the $1,850/mt level. The most-liquid SHFE August contract also lost most of the gains from the previous two sessions as rising shorts dragged it 0.72% lower at 13,760 yuan/mt. Weak fundamentals are likely to see the contract at 13,700-13,850 yuan/mt today, with LME aluminium at $1,790-1,850/mt.  

Zinc: Three-month LME zinc lost support from $2,400/mt as it slid from a high of $2,428/mt and closed 0 52% lower at $2,393/mt. Support from the five-day moving average remained. Expectations of higher inventories in the short term will keep prices at $2,360-2,410/mt today. The most-liquid SHFE September contract failed to extend its increase at 19,195 yuan/mt and slipped to a low of 19,030 yuan/mt, ending 0.1% lower at 19,035 yuan/mt. Falling spot premiums indicated weak downstream consumption, which may keep the contract at $2,360-2,410/mt today. 

Nickel: Three-month LME nickel rose for the seventh straight session as a lower US dollar lifted it to a high of $13,200/mt and settled it 0.81% higher at $13,120/mt. The most-traded SHFE August contract climbed to the highest in four months, and finished at 103,390 yuan/mt, up 0.69% on the day. It is likely to test resistance from the 105,000 yuan/mt level today. 

Lead: Three-month LME lead came off from highs around $1,977/mt after LME lead inventories expanded 1,800 mt. It still finished 0.33% higher on the day, at $1,964.5/mt. The most-liquid SHFE August contract hovered within a broad range with a low of 15,990 yuan/mt. It closed at 16,090 yuan/mt, up 0.09% on the day. Today, the contract is likely to continue to struggle around the 16,000 yuan/mt level. 

Tin: Three-month LME tin received support from its higher SHFE counterpart and rebounded to a high of $18,360/mt, ending 0.61% higher at $18,275/mt. It will trade with support from $17,500/mt today. The most-active SHFE September contract regained losses from the previous day as investors covered their shorts It closed higher at 134,960 yuan/mt overnight, and may face pressure above from 135,700 yuan/mt today.