SMM Morning Comments (Jul 4)

SHANGHAI, Jul 4 (SMM) – 

Copper: Disappointing US employment data drove investors to cover their shorts and this rallied copper prices. Both three-month LME copper and the most-traded SHFE August contract grew more than 0.5%, with open interests across all SHFE copper contracts down some 7,000 lots as shorts exited. However, limited changes in fundamentals and concerns about a global economic slowdown will continue to pressure prices in the short run. LME copper inventories surged over 30,000 mt on Wednesday. Today, LME copper is seen trading at $5,890-5,950/mt, with its SHFE counterpart at 46,300-46,700 yuan/mt. Downstream purchases will keep spot premiums firm at 60-140 yuan/mt. 

Aluminium: As the US dollar weakened, three-month LME aluminium climbed along with the five-day moving average, to a high of $1,793/mt, ending up 0.53% at $1,789/mt. The most-liquid SHFE August contract also closed 0.66% higher at 13,740 yuan/mt, after it climbed to the highest overnight at 13,745 yuan/mt. Trading range today is seen at 13,650-13,800 yuan/mt, with LME aluminium at $1,770-1,800/mt. 

Zinc: Lower LME zinc inventories buoyed three-month LME zinc to the 10-day moving average, around $2,480/mt, but eased backwardation depressed its upward momentum, ending it 0.81% lower on the day at $2,448/mt. The most-active SHFE August contract retreated after jumped to highs of 19,740 yuan/mt, driven by expectations of upcoming maintenance across northern smelters. The contract gained 0.2% and finished at 19,690 yuan/mt. Today, it is expected to trade between 19,500-20,000 yuan/mt, with LME zinc at $2,430-2,480/mt. 

Nickel: A weaker greenback and lower nickel stocks across LME-approved warehouses boosted three-month LME nickel to a high of $12,385/mt, before it closed at $12,370/mt, up 2.15% on the day. With pressure above from the five- and 10-day moving averages, it may manage to stand firm above the 60-day moving average today. The most-traded SHFE August contract found support from the 98,000 yuan/mt level after it slipped below the daily moving average, ending higher at 98,440 yuan/mt. Today, it will continue to test support from 98,000 yuan/mt and hover around the five-day moving average. 

Lead: Three-month LME lead fell for the third consecutive trading day as it slid 0.48% overnight to end at $1,879.5/mt after jumped to a high of $1,900.5/mt. The most-active SHFE August contract rebounded from a low of 15,925 yuan/mt, and closed 0.19% higher at 16,045 yuan/mt. Shorts departing at lows will provide some support to the contract in the short term.  

Tin: Three-month LME tin regained nearly half of the losses from the previous session as it rebounded to a high of $18,300/mt and closed 2.97% higher at $18,200/mt. With support from $17,600/mt, it is likely to test resistance from $18,300/mt today. The most-liquid SHFE September contract also rallied, on lower US dollar and higher oil prices, to a high of 135,330 yuan/mt, but remained below all the moving averages, ending up 2.29% at 134,100 yuan/mt. Pressure above is seen from the five-day moving average, or the 135,900 yuan/mt level.