SMM Morning Comments (May 18)

SHANGHAI, May 18 (SMM) –

Copper: LME copper stuck between several moving averages with support at the 40-day moving average overnight. As the US dollar is unlikely to fall from highs in the short term, we see LME copper trading rangebound at $6,850-6,900/mt with the SHFE 1807 contract at 51,000-51,500 yuan/mt during the day. Spot discounts are expected at 100-20 yuan/mt as sellers are likely to hold back.

Aluminium: Prices of LME aluminium faced pressure overnight as CHALCO called for a lift of China's tariff on primary aluminium's export. The SHFE 1807 contract is expected to hover at 14,800-14,900 yuan/mt today with spot discounts at 100-80 yuan/mt as smelters increased deliveries. 

Zinc: LME zinc traded rangebound around $3,075/mt with pressure from the daily moving average before bouncing to close higher at $3,091/mt overnight. It failed to stand firm above $3,100/mt with support at $3,050/mt. We see it trading at $3,060-3,110/mt today with resistance at the 20-day moving average. The SHFE 1807 contract also edged up to close at 23,720 yuan/mt overnight. It is likely to trade at 23,500-23,950 yuan/mt during the day.

Nickel: Despite a stronger US dollar, nickel prices are likely to receive support in the short term from shrinking inventories across both LME and domestic warehouses, and domestic consumption of stainless steel. LME nickel inched up to close at $14,590/mt overnight. We expect it to consolidate at current levels today. The SHFE 1807 contract is likely to trade at 107,300-109,200 yuan/mt today with spot prices at 106,800-108,700 yuan/mt. 

Lead: LME lead rose to a high of $2,372.5/mt last night, as most base metals rebounded, andreturned above the five-day moving average. It is likely to see some upward room today. The SHFE 1806 contract received support at 19,500 yuan/mt and closed higher from Thursday at 19,595 yuan/mt. It is likely to fall from highs and test support at 19,500 yuan/mt today. 

Tin: LME tin regained some losses after it fell to a low of $20,415/mt overnight. Given the strong US dollar, we expect it to continue its decline and test the support at the $20,600/mt level today. The SHFE 1809 contract opened lower and remained weak and rangebound overnight. We expect it to continue to test the support at the 145,000 yuan/mt level with a trading range of 145,000-146,000 yuan/mt today.

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