SMM Morning Comments (Jun 28)

SHANGHAI, Jun 28 (SMM) – 

Copper: Most base metals hovered steadily as investors waited for US-China trade talks at the G-20 summit this weekend. An uptick in US economic growth for the first quarter improved market sentiment, while a high US dollar continued to weigh on copper prices. Prices may face limited upward momentum today as investors remain cautious about macroeconomic development. We expect three-month LME copper to trade between $5,970-6,020/mt, with the most-traded SHFE August contract at 46,700-47,200 yuan/mt today. Spot offers are seen at a discount of 10 yuan/mt to a premium of 50 yuan/mt. 

Aluminium: Three-month LME aluminium lost most of the gains from earlier this week as it dipped to a low of $1,788/mt, testing support from the 10-day moving average, and ended at $1,798.5/mt, down 0.85% on the day. The most-liquid SHFE August contract pared some losses as it rebounded from 13,825 yuan/mt and settled at 13,830 yuan/mt. Today, it is expected to trade at 13,750-14,100 yuan/mt with LME aluminium at $1,780-1,830/mt. 

Zinc: Three-month LME zinc failed to hold firm above the 10-day moving average after rebounded from a low of $2,490/mt. It lost 0.56% and finished at $2,486.5/mt. As the backwardation structure eased and inventories grew further, prices are likely to consolidate between $2,470-2,520/mt today with limited upward momentum. The most-active SHFE August contract ceased its increase at 19,960 yuan/mt and closed 0.2% lower at 19,895 yuan/mt. Today, it is likely to hover weakly around the five- and 10- day moving averages, at 19,750-20,250 yuan/mt, given the limited signs of a pickup in the spot market. 

Nickel: Both three-month LME nickel and the most-traded SHFE August contract expanded for four consecutive trading days, with LME nickel hitting the highest in two months, at $12,770/mt, ending up 1.84% at $12,735/mt overnight. The SHFE August contract found support from the daily moving average and closed 1.3% higher at 102,350 yuan/mt. Today, we see the contract trading above the Bollinger upper band, with LME nickel above the five-day moving average, or $12,500/mt. Spot prices are likely at 100,800-102,500 yuan/mt. 

Lead: Technical support extended the increase in three-month LME lead as it climbed to a high of $1,941.5/mt and ended 0.91% on the day at $1,940/mt. The most-active SHFE August contract retreated after jumped to a high of 16,085 yuan/mt, closing 0.5% lower at 16,055 yuan/mt. Uncertainties around the outcome of the G-20 summit will keep investors wary today. 

Tin: Three-month LME tin slipped overnight with signs of diverging from the daily moving average. The most-traded SHFE September contract held steady as it bounced to the daily moving average after slid a low of 143,540 yuan/mt, ending higher at 143,750 yuan/mt. It is likely to test support from 143,500 yuan/mt today, with LME tin struggling above the $18,600/mt level.