SMM Morning Comments (Jun 18)

SHANGHAI, Jun 18 (SMM) –

Copper: Three-month LME copper rebounded to close 0.77% higher at $5,852/mt on Monday, while the most traded SHFE August contract rallied to end 0.3% higher at 46,300 yuan/mt overnight. This was bolstered by speculative longs adding positions. Concerns about demand for copper amid a global slowdown cast a pall over the copper market, and limited upside in copper prices despite tighter ore supplies. SHFE copper failed to find support from the technical front, given pressure from the five- and 10-day moving averages. LME copper is expected to trade between $5,820-5,870/mt today, with SHFE copper at 46,100-46,600 yuan/mt. Spot premiums are seen at 20-80 yuan/mt, and trades are unlikely to pick up as sellers remain keen to hold offers firm after the delivery on Monday.

Aluminium: Three-month LME aluminium slid to a low of $1,745/mt, the lowest since January 11, 2017, on Monday before it rebounded to close the trading day at $1,758.5/mt. It is expected to trade rangebound between $1,740-1,800/mt today. As longs added and shorts cut their positions, the most active SHFE August contract recovered from earlier losses. Short positions accumulated nearly 6,000 lots and closed the contract flat at 13,825 yuan/mt overnight. Pessimism surrounding alumina will weigh on SHFE aluminium, while falling social inventories will offer support. The SHFE 1908 contract is expected to trade between 13,700-14,000 yuan/mt today, with spot premiums of up to 20 yuan/mt over the July contract.

Zinc: As shorts loaded up their positions following an increase in cancelled LME zinc warrants, three-month LME zinc dropped to a low of $2,427/mt on Monday before it rallied to close the trading day 0.75% higher at $2,474/mt, snapping a three-day losing streak. Support is seen at the lower Bollinger band, while the five- and 10-day moving averages which adhered to each other and created strong resistance. Greater cancellation of LME zinc warrants grew the expectations of more deliveries to LME-approved warehouses, which will weigh on fundamentals and limit upside in LME zinc. The contract is expected to trade between $2,430-2,480/mt today. A stronger LME zinc drove Shanghai zinc shorts to cover their positions overnight, pushing the most traded August contract up from earlier lows to close 0.73% higher at 20,110 yuan/mt. With strong resistance at the five- and 10-day moving averages, the contract is expected to trade weakly around that level, and most transactions are seen at 19,750-20,250 yuan/mt.  

Nickel: A significant increase of 4,026 mt in LME nickel inventories and steady US dollar weighed on three-month LME nickel on Monday, which lost 1.3% to end at $11,765/mt. The most liquid SHFE August contract opened lower at 98,550 yuan/mt and failed to recover from those losses overnight, slipping 1.27% to close at 97,970 yuan/mt. LME nickel is expected to trade between $11,700-11,850/mt today, with SHFE nickel at 97,500-99,000 yuan/mt. Spot prices are seen at 98,000-100,000 yuan/mt.

Lead: Three-month LME lead rose on Monday, gaining 0.51% to close at $1,882.5/mt. Pressure is lined up at the upper Bollinger band, with support from the middle band under scrutiny. The most active SHFE July contract advanced for a third straight session overnight, rising 0.96% to end at 16,240 yuan/mt. It is likely to shrug off its recent rangebound pattern at lows if it can break the 16,300 yuan/mt level.

Tin: Lower crude prices and sharply increased LME tin inventories weighed on three-month LME tin on Monday, which dropped 1.61% to close at $18,905/mt. Support is seen at $18,500/mt while resistance is at $19,300/mt. The substantial decline in LME tin sent the most traded SHFE September contract to open lower overnight, and SHFE tin extended its losses during overnight trading hours to close 0.5% lower at 143,960 yuan/mt. Support is seen at 143,500 yuan/mt while resistance is at the five-day moving average as high as 144,800 yuan/mt.