SMM Morning Comments (Jul 18)

SHANGHAI, Jul 18 (SMM) – 

Copper: The most-active SHFE contract rallied and tested the 47,000 yuan/mt level after disappointing US new housing starts data lowered the greenback. However, it failed to break pressure from that level and closed some 0.1% lower on the day, dragged by slower declines in crude stockpiles. The contract is expected to trade between 46,400-46,900 yuan/mt today, with its LME counterpart at $5,950-6,000/mt. Spot premiums are seen at 30-90 yuan/mt as sellers keep from offloading cargoes at lower prices. 

Aluminium: Three-month LME aluminium rose for the fourth straight trading day as it rallied from a low of $1,836/mt to highs around $1,848/mt, settling up 0.2% at $1,847/mt. The most-traded SHFE September contract pared some losses as it rebounded to end 0.32% lower on the day at 13,840 yuan/mt, after it slid to a low of 13,825 yuan/mt. As the KDJ indicators expanded downwards, it is expected to hover at 13,750-13,850 yuan/mt, with LME aluminium at $1,800-1,860/mt. 

Zinc: Three-month LME zinc found support from $2,450/mt and rallied to finish at $2,472/mt, up 0.24% on the day, driven by departing shorts. The most-liquid SHFE September contract hovered around the 20-day moving average with a high of 19,460 yuan/mt, as downstream purchases offered some confidence in longs. The contract settled 0.26% higher at 19,405 yuan/mt overnight, and may trade between 19,200-19,700 yuan/mt today. LME zinc is likely to trade between $2,420-2,470/mt today. 

Nickel: Three-month LME nickel continued to trend upwards as it climbed to a high of $14,460/mt, and settled 3.12% higher on the day, buoyed by upbeat market sentiment and a weaker US dollar. This marked the 11th consecutive trading day of increases. Pressure above is seen from $16,000/mt in the short term. The most-active SHFE nickel contract gained 1.29% to close at 112,860 yuan/mt, after longs lifted it to a high of 113,000 yuan/mt. It may face resistance from 116,000 yuan/mt today. 

Lead: Three-month LME lead climbed above the $2,000/mt level to a high of $2,009.5/mt, ending up 1.26% at $2,005.5/mt. Limited support from fundamentals amid a contango structure will cap its upside room. The most-liquid SHFE September contract also rose to a high of 16,495 yuan/mt and gained 0.83% on the day to end at 16,440 yuan/mt. Continued thin trades in the spot market may undermine its upward momentum today. 

Tin: Three-month LME tin retreated from a high of 18,070 yuan/mt, ending some 0.2% higher at $17,945/mt amid lower LME tin inventories. The most-liquid SHFE September contract stemmed increase at 134,470 yuan/mt, and fell swiftly to a low of 133,500 yuan/mt, closing at 134,000 yuan/mt. Currently around the five-day moving average, it is expected to test support from 132,000 yuan/mt today, with LME tin managing to stand above the $18,000/mt level.