SMM Morning Comments (Jul 29)

SHANGHAI, Jul 29 (SMM) –

Copper: A firmer US dollar weighed on copper prices on Friday night, with three-month LME copper shedding 0.33% to end its trading day at $5,966/mt. The most traded SHFE September contract fell to a low of 46,780 yuan/mt shortly after Friday night’s opening bell, and closed the session 0.47% lower at 46,840 yuan/mt. The load-up of short positions primarily accounted for Friday night’s loss in SHFE copper. The Fed is widely expected to cut interest rates by at least a quarter point at this week’s meeting, which will likely briefly bolster copper prices. Market sentiment improved after the US announced that it would waive tariffs on 110 Chinese exports to the US. US and China negotiators will resume trade talks this week. LME copper is expected to trade between $5,950-5,990/mt today, with SHFE copper at 46,800-47,010 yuan/mt. Spot prices are seen in a discount of 20 yuan/mt to a premium of 40 yuan/mt as month-end financial settlement and volatile prices of futures dampen trading enthusiasm.  

Aluminium: Three-month LME aluminium dropped to a three-week low of $1,794/mt on Friday before it recovered some ground to end 1.09% lower at $1,806.5/mt. It is expected to trade between $1,780-1,840/mt today. The unwinding of long positions led to a lower open in the most traded SHFE September contract on Friday night, which later clawed back some losses to close 0.18% lower at 13,880 yuan/mt. Given weak performance on Friday night and poor fundamentals, SHFE aluminium is expected to trade between 13,830-13,930 yuan/mt today, with spot prices in a discount of 20 yuan/mt to a premium of 20 yuan/mt.

Zinc: Three-month LME zinc fell to a low of $2,412.5/mt on Friday before it rebounded to close 0.58% higher at $2,441/mt, supported by continual declines in LME zinc inventories. LME zinc is expected to trade between $2,420-2,470/mt today. The most active SHFE September contract crept up above the 10-day moving average to a high of 19,370 yuan/mt on Friday night before it erased some gains to close 0.49% higher at 19,320 yuan/mt. While SMM data on Friday showed that social inventories of refined zinc across Shanghai, Tianjin and Guangdong continued to shrink last week, sentiment among longs remains subdued by expectations of an inventory rebound. The contract is expected to trade between 19,000-19,500 yuan/mt today.

Nickel: Three-month LME nickel recovered from earlier losses to close 0.75% higher at $14,135/mt on Friday. It is expected to trade rangebound between $14,000-14,400/mt today, with pressure from the $14,300/mt level where the five- and 10-day moving averages adhere to each other. The most traded SHFE October contract fluctuated to close 0.26% higher at 110,830 yuan/mt on Friday night. It is expected to continue to hover above 110,000 yuan/mt today.

Lead: As funds exited, three-month LME lead pulled back on Friday, losing 1.05% to end at $2,075/mt. But it has yet to derail from the recent uptrend, and is likely to see some swinging trade in both directions in the short term. A weaker LME lead weighed on its SHFE counterpart, with the most active SHFE September contract opening lower and weakening on Friday night. The contract shed 1.13% to close at 16,645 yuan/mt. SHFE lead is expected to continue to follow the London market, but pressure at highs is strong in the short run.

Tin: Three-month declined 0.81% to end at $17,655/mt on Friday. Support is seen at a previous of $17,500/mt. The most traded SHFE September contract opened higher before it eased to close 0.25% lower at 134,680 yuan/mt on Friday night. Resistance is seen at 136,000 yuan/mt while support is at 134,000 yuan/mt.