SMM Morning Comments (Jul 25)

Published: Jul 25, 2019 09:31 (GMT+8)

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SHFE base metals traded higher across the board overnight

SHANGHAI, Jul 25 (SMM) –

Copper: Copper prices strengthened overnight, as downbeat US factory activity and new home sales data weighed on the dollar. Three-month LME copper rose to a high of $6,017/mt before it closed the trading day 0.25% higher at $5,999/mt, and the most traded SHFE September contract gained 0.23% to end at 47,100 yuan/mt overnight. Copper prices, however, remain under pressure from concerns over growth and demand, which exacerbated by weak economic data from the Eurozone. Oil prices on Wednesday erased earlier gains from a big draw in US crude inventories, which also showed market worries about slowing global economic growth that will weaken demand. Technical indicators for SHFE copper also showed bearish signals. LME copper is expected to trade between $5,950-6,000/mt today, with SHFE copper at 46,800-47,200 yuan/mt. Spot premiums are seen at 10-70 yuan/mt, as recent demand for long-term contract delivery drives sellers to hold offers firms.

Aluminium: Three-month LME aluminium climbed to a high of $1,833/mt on Wednesday, before it erased some gains to end 0.19% higher at $1,824.5/mt. The load-up of long positions primarily accounted for the gains. It is expected to trade between $1,800-1,840/mt today. The most traded SHFE September contract rose to a high of 13,825 yuan/mt overnight before it eased to end 0.11% higher at 13,790 yuan/mt. It is expected to trade between 13,750-13,850 yuan/mt today, with spot prices at a discount of 20 yuan/mt to a premium of 20 yuan/mt.

Zinc: Three-month LME zinc climbed to a high of $2,473.5/mt on Wednesday before it pared some gains to close 0.37% higher at $2,454.5/mt, posting a three-day winning streak. It is likely to pull back today, with a trading range of $2,420-2,470/mt. With weak fundamentals, the most active SHFE September contract eased after a higher open overnight, closing a tad higher at 19,285 yuan/mt. It is expected to retreat to 19,000-19,500 yuan/mt today.

Nickel: Three-month LME nickel rallied on Wednesday, gaining 2.14% to end at $14,530/mt. A decline of 1,614 mt in LME nickel inventories offered some support. Whether the contract could shrug off pressure from the five-day moving average to hold above $14,500/mt is crucial to watch today. As longs added their positions, the most traded SHFE October contract advanced 1.63% to close at 113,770 yuan/mt overnight. Support from the 10-day moving average and resistance from the five-day moving average and the 115,000 yuan/mt level will come under scrutiny today.

Lead: Three-month LME lead extended its increase on Wednesday, advancing 2.01% to end at $2,076/mt, near the key $2,100/mt level. Whether the contract could stand firmly above $2,100/mt will depend on changes in inventories and funds flows. The most active SHFE September contract eased from a higher open to close 1.09% higher at 16,700 yuan/mt overnight. SHFE lead underperformed its LME counterpart, lowering the SHFE/LME price ratio. LME lead will direct the Shanghai market in the near term.

Tin: Three-month LME tin fell to a fresh three-year low of $17,500/mt on Wednesday, before it rebounded to finish the trading day 1.33% higher at $17,935/mt. Support is seen from $17,500/mt, while resistance is from $18,000/mt. As longs loaded up positions, the most liquid SHFE September contract rapidly rose to 135,460 yuan/mt in early trade overnight, before it traded in a tight range in the rest of trading hours to end at 135,110 yuan/mt, with a gain of 1.64%. SHFE tin remained in its recent range, with support from 132,000 yuan/mt and resistance from 137,500 yuan/mt.

Morning comments Copper Aluminium Zinc Lead Nickel Tin

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