SMM Morning Comments (Jul 16)

SHANGHAI, Jul 16 (SMM) – 

Copper: Upbeat economic data from major metals consumer China spurred market confidence and supported copper prices overnight, but a higher US dollar limited the growth. Three-month LME copper pared some gains as it slid from a high of $6,020/mt. The most-liquid SHFE September contract tested pressure from the 47,100 yuan/mt level with support from the 20-day moving average. With MACD red line lengthening, the SHFE contract is expected to trade between 46,700-47,200 yuan/mt with LME copper at $5,975-6,020/mt today. Spot premiums may ease to 20-80 yuan/mt as higher futures prices deter downstream purchases. 

Aluminium: Three-month LME aluminium climbed to a high of $1,843/mt and ended 0.82% higher on the day at $1,843/mt as improved macroeconomic sentiment buoyed most base metals. Lower inventories below 1 million mt across LME-approved warehouses also helped prices to break resistance from all moving averages overnight. The most-liquid SHFE September contract closed 0.36% higher at 13,895 yuan/mt, with optimistic signs of the KDJ indicators moving upwards. It is likely to trade between 13,750-13,900 yuan/mt today, with LME aluminium at $1,790-1,850/mt. 

Zinc: Three-month LME zinc pared some overnight gains as a higher US dollar drove it to a low of $2,421.5/mt, before it ended 0.16% higher at $2,441/mt. The most-active SHFE September contract climbed for the second consecutive trading day as longs loaded up their positions amid lower inventories across domestic social warehouses. It advanced 0.36% overnight to close at 19,285 yuan/mt. Trading range today is expected at 19,000-19,500 yuan/mt, with LME zinc at $2,400-2,450/mt. 

Nickel: Three-month LME nickel extended its robust trend as it rose for the ninth consecutive trading day, with support from the Bollinger upper band. It is expected to hover between $13,600-14,000/mt and test resistance from the $14,000/mt level. The most-liquid SHFE September contract shrugged off pressure from 107,000 yuan/mt to the highest since September 2018, at 107,600 yuan/mt, and settled higher on the day at 106,980 yuan/mt. A surge of longs accounted for the increase. Today, it is expected to test support from the 106,800 yuan/mt level. 

Lead: Three-month LME lead stopped falling at $1,972/mt and rallied to close 0.1% higher at $1,980/mt. As longs and shorts fought, it is expected to test resistance from $2,000/mt today. The most-active SHFE September contract followed its LME counterpart higher and settled up 0.59% at 16,160 yuan/mt. It is likely to extend a rangebound trend today as fundamentals barely improve. 

Tin: Three-month LME tin rebounded to around $18,170/mt during the European trading session, but a higher US dollar and lower prices of crude oil again depressed it below the $18,000/mt level, ending it lower on the day at $17,860/mt. The most-liquid SHFE September contract faced pressure from the five- and 10-day moving averages, and slipped from a high of 134,500 yuan/mt to close at 132,760 yuan/mt. It may test support from 132,000 yuan/mt today as LME tin climbs above $17,500/mt.