SMM Morning Comments (Jul 10)

SHANGHAI, Jul 10 (SMM) – 

Copper: Prices of copper slid overnight amid intensified risk aversion as the market awaited the US Federal Reserve's decision on whether to cut interest rates. The most-active SHFE September contract fell to the Bollinger lower band, hitting a low of 45,620 yuan/mt, as shorts aggressively loaded up their positions. It is expected to trade between 45,700-46,100 yuan/mt today with three-month LME copper at $5,800-5,850/mt. Lower futures prices may attract some downstream purchases today, with spot premiums expected at 30-90 yuan/mt. 

Aluminium: Three-month LME aluminium outperformed most other base metals as it climbed to a high of $1,820/mt and closed 0.89% higher on the day at $1,820.5/mt. The KDJ indicators expanded upwards and the MACD red line lengthened. However, pressure above will cap its upside room and keep it between $1,780-1,830/mt today. The most-active SHFE August contract retreated after rose to a high of 13,790 yuan/mt, ending flat at 13,755 yuan/mt. Today, it is expected to hover at 13,650-13,800 yuan/mt with pressure above. 

Zinc: Three-month LME zinc registered five straight trading days of decline as exiting longs dragged it to a low of $2,355/mt, before it closed 0.5% lower at $2,369.5/mt. Receding worries about a zinc supply shortage will keep prices weak at $2,350-2,400/mt today. The most-liquid SHFE September contract fell below support from 19,000 yuan/mt, ending 0.39% lower at 18,930 yuan/mt. A surge of short positions amid bearish sentiment will keep the contract at 18,700-19,200 yuan/mt today. 

Nickel: With support from several moving averages below, three-month LME nickel advanced to a high of $12,775/mt and closed higher for the fifth consecutive trading day, at $12,750/mt. It is likely to test resistance from $12,800/mt today. The most-liquid SHFE August contract shrugged off pressure from the daily moving average to a high of 101,290 yuan/mt, and finished 1.04% higher at 101,240 yuan/mt. It will face pressure from the 102,400 yuan/mt level and the Bollinger upper band today. 

Lead: Three-month LME lead broke pressure from several moving averages and climbed to a high of $1,938/mt during the European trading session, ending up 2.43% on the day at $1,938/mt. A higher LME lead buoyed its SHFE counterparts, as the most-active SHFE August contract moved up to a high of 16,450 yuan/mt before settled 2.27% higher at 16,200 yuan/mt. Investors should remain cautious about prices coming off from highs today. 

Tin: The most-traded SHFE September contract held steady around the five-day moving average, with a high of 136,260 yuan/mt, but three-month LME tin fell on a higher US dollar and accumulated shorts, closing lower at $18,230/mt. Today, the SHFE contract may test pressure from the 10-day moving average, or 137,000 yuan/mt, with LME tin struggling above $18,200/mt, or $18,000/mt.