SMM Morning Comments (Jul 17)

SHANGHAI, Jul 17 (SMM) – 

Copper: Three-month LME copper failed to stand firm above the $6,000/mt level last night and the most–traded SHFE September contract also retreated from a high of 47,280 yuan/mt, to below 47,000 yuan/mt, after the US dollar rose on higher-than-expected US retail sales data. Oil prices slid as production in the Gulf of Mexico restarted after a tropical storm, and this also depressed copper prices. With pressure from the 60-day moving average and bearish signs from the KDJ indicators, the SHFE contract is expected to trade between 46,700-47,000 yuan/mt, with its LME counterpart at $5,940-5,980/mt today. Spot premiums are seen firm at 10-90 yuan/mt with downstream consumers purchasing on lower futures prices.

Aluminium: Three-month LME aluminium came off after climbed to a high of $1,856.5/mt, settling higher on the day at $1,844/mt. The most-liquid SHFE September contract also pared some gains as it eased from a high of 13,930 yuan/mt, before closed higher for the third consecutive trading day at 13,905 yuan/mt. Today, it is expected to trade between 13,800-13,950 yuan/mt, with LME aluminium at $1,800-1,860/mt. 

Zinc: Three-month LME zinc shrugged off pressure from the 40-day moving average to a high of $2,488.5/mt, before ending 1.02% higher at $2,466/mt. Improved sentiment on upbeat US economic data and slower-than-expected accumulation in overseas zinc inventories buoyed prices. The most-traded SHFE September contract gained for the third straight trading day as it rose to a high of 19,550 yuan/mt and finished 1.09% higher at 19,460 yuan/mt. Strong upward momentum is expected to keep it at 19,250-19,750 yuan/mt today, with LME zinc at $2,450-2,500/mt today. 

Nickel: Three-month LME nickel extended its robust trend and climbed to the highest since August 2018 at $14,200/mt, ending 2.01% higher at $13,940/mt. The SHFE September contract continued to consolidate above the Bollinger upper band and advanced to a high of 111,460 yuan/mt as longs loaded up their positions. The most-active SHFE nickel contract moved to the October contract overnight, which is expected to trade around the 110,000 yuan/mt level with LME nickel also at highs today. 

Lead: Three-month LME lead gained for the seventh consecutive trading day but with a slower pace as pressure above prevented it from exceeding $1,995/mt and settled it at $1,980.5/mt, up 0.03% on the day, The most-liquid SHFE September contract retreated after rose, and finished 0.77% higher at 16,300 yuan/mt. Shorts are expected to pile on pressure if the contract fails to hold firm at highs today. 

Tin: Three-month LME tin eased losses as it rebounded from a low of $17,850 yuan/mt and settled higher on the day at $17,915/mt. The most-liquid SHFE September contract traded lower overnight with investors covering their longs and adding shorts. The contract lost 0.1% to close at 133,500 yuan/mt, and may test support from 132,000 yuan/mt today. LME tin is expected to face resistance from $18,200/mt, with support from $17,500/mt today.