SMM Morning Comments (Aug 2)

SHANGHAI, Aug 2 (SMM) – 

Copper: Intensified US-China trade tensions and weak fundamentals continued to pressure copper prices, as the most-active SHFE contract slipped to a low of 46,420 yuan/mt and nearly lost support from 46,400 yuan/mt. It finished the trading day slightly higher with three-month LME copper easing 1.2%. With lengthening MACD green line, the SHFE contract may hover between 45,900-46,400 yuan/mt today with its LME counterpart at $5,800-5,850/mt. Lower futures prices are expected to support spot premiums at 40-80 yuan/mt. 

Aluminium: Three-month LME aluminium hovered below the daily moving average and failed to stand above the 10-day moving average, or $1,792/mt, ending down 1.22% at $1,777/mt. The most-traded SHFE September contract also lacked upward momentum as it fell 0.25% to close at 13,820 yuan/mt, with resistance from 13,840 yuan/mt. Domestic higher inventories of primary aluminium suggested slow downstream consumption, which may keep the contract at 13,800-13,900 yuan/mt today. LME aluminium is seen trading at $1,770-1,800/mt today. 

Zinc: Three-month LME zinc broke support from $2,400/mt and fell to a low of $2,387/mt, before it found support from the Bollinger middle band and settled 1.72% lower on the day at $2,396.5/mt. Intensified contango structure and higher LME zinc inventories are expected to keep prices weak, between $2,370-2,420/mt today. The most-active SHFE zinc contract rebounded from a low of 19,150 yuan/mt but lost all the gains near closing, ending down 0.62% at 19,265 yuan/mt. Amid bearish macroeconomic sentiment, it is seen hovering around the Bollinger lower band at 19,000-19,500 yuan/mt today. 

Nickel: Three-month LME nickel lost all the gains overnight as came off after a softened US dollar drove it to a high of $14,470/mt. It ended the trading day 0.72% lower at $14,450/mt. The most-liquid SHFE October contract shrugged off pressure from 113,000 yuan/mt, 114,000 yuan/mt, and 115,000 yuan/mt successively, to a high of 116,050 yuan/mt as longs aggressively loaded up their positions. It gained 2.89% on the day to close at 115,840 yuan/mt, with open interests rising 36,000 lots to 407,000 lots. With support from the five- and 10- day moving average, the contract may face resistance from 117,000 yuan/mt today, with LME nickel testing pressure from $14,700/mt. 

Lead: Three-month LME lead extended losses from the Asian trading hours and dipped to a low of $1,978/mt, approaching the Bollinger middle band. It shed 1.69% overnight to close at $1,981.5/mt, with further downside room expected today amid trade fears. The most-liquid SHFE September contract pared losses as the 20-day moving average give some support and lifted it from a low of 16,320 yuan/mt. It finished the trading day 0.46% lower at 16,395 yuan/mt. Despite technical support, the risk of escalating trade tensions will keep the contract weak today. Support is seen from 16,300 yuan/mt. 

Tin: As tin inventories across LME-listed warehouses shrank some 910 mt, three-month LME tin recovered to a high of $17,470/mt, before it pared some gains and closed at $17,345/mt. Support is expected from $17,000/mt today. The most-liquid SHFE September contract consolidated around the 134,000 yuan/mt level and closed slightly higher on the day at 134,000 yuan/mt. Resistance is seen at 135,600 yuan/mt, with support from 133,500 yuan/mt today.