SMM Morning Comments (May 9)

SHANGHAI, May 9 (SMM) –

Copper: LME copper fell below all moving averages overnight and the SHFE 1807 contract performed no better. We expect LME copper to trade at $6,760-6,830/mt today with SHFE 1807 at 50,700-51,200 yuan/mt. Spot premiums are seen higher at 50-100 yuan/mt as sellers are likely to offer higher against the falling futures market.

Aluminium: The SHFE 1807 contract fell to a low of 14,745 yuan/mt amid risk aversion as the US decided to pull back from the Iran nuclear deal, but support was seen at the 10-day moving average. Prices rebounded a little as the sentiment cooled. We expect it to test support at several moving averages and trade at 14,550-14,750 yuan/mt today with spot prices at a discount of 30 yuan/mt to a premium of 10 yuan/mt. LME aluminium is likely to trade at $2,330-2,380/mt.

Zinc: LME zinc saw bouts of volatility and hit a low of $3,046.5/mt overnight after US dollar strengthened from Fed Chair Jerome Powell’s hawkish comments. The movement in oil prices following Trump’s decision to exit the Iran nuclear deal also grew uncertainty. We see limited upward room for LME zinc and expect it to trade at $3,065-3,115/mt today. The SHFE 1807 contract fell to a low of 23,500 yuan/mt before climbing up to a high of 23,820 yuan/mt as longs added their positions. We expect it to consolidate at 23,500-24,000 yuan/mt in the short term with no clear market direction for now. The 0# common brands are likely to trade at premiums of 60-100 yuan/mt over the SHFE 1806 contract with Shuangyan at premiums of 80-120 yuan/mt.

Nickel: Suppressed by the strong US dollar, LME nickel fell to a low of $13,745/mt while SHFE 1807 contract fell to a low of 103,350 yuan/mt overnight. We expect LME nickel to continue its rangebound pattern today with support at several moving averages. We see the SHFE 1807 contract trading at 103,400-105,000 yuan/mt today with spot prices at 102,900-104,500 yuan/mt.

Lead: LME lead failed to sustain support at $2,300/mt overnight as the US dollar strengthened and as LME inventories rose 900 mt. It is likely to trade weakly around $2,300/mt with support at the five-day moving average today. The SHFE 1806 lead contract moved in line with LME lead last night and recovered some losses near closing as investors added their long positions. The contract is likely to trade rangebound with pressure at 19,000 yuan/mt today.

Tin: LME tin edged down overnight as the US dollar surged to a four-month high of 93.29. It is likely to continue to face pressure from a strong US dollar. SHFE tin rebounded after it fell to a low of 145,370 yuan/mt last night. We see it also facing pressure in the short term and trading at 145,000-147,000 yuan/mt today.

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