SMM Morning Comments (Jun 10)

SHANGHAI, Jun 10 (SMM) –

The Shanghai Futures Exchange closed from Thursday night for the Dragon Boat Festival and will reopen today.

Copper: As the US dollar dropped on downbeat nonfarm data, three-month LME copper rallied on Friday before the loading up of short positions lowered to $5,740/mt. It ended the trading day down 0.8%, at $5,792.5/mt. A global economic slowdown and weak copper consumption dragged on copper prices on Friday. Shorts added their positions at highs, but appeared keen to take profits at $5,800/mt to avoid further losses. Weakening consumption across Chinese markets and sufficient supplies are unlikely to offer support to copper prices. LME copper is expected to trade at $5,780-5,830/mt today, with SHFE copper at 46,000-46,500 yuan/mt. Spot premiums are seen firm at 120-180 yuan/mt, which is likely to limit trades across the physical market.

Aluminium: Three-month LME aluminium fell to a low of $1,757/mt on Friday before it closed the trading day 0.76% lower at $1,760.5/mt. The unwinding of long positions accounted for the loss on the day. Its weekly KDJ lines expanded downwards, with an extended MACD green bar. A weaker US dollar and relatively poor fundamentals are likely to keep LME aluminium rangebound between $1,750-1,810/mt today. The most active SHFE July contract is expected to trade rangebound between 13,900-14,200 yuan/mt today, with spot premiums of 10-30 yuan/mt over the June contract.

Zinc: Three-month LME zinc lost 1.07% on Friday to close at $2,485/mt. Technical pressure is expected to limit upside room in SHFE zinc, which is expected to consolidate between $2,475-2,525/mt today. Expectations for greater inventories from larger supplies from Chinese smelters are expected to limit upward momentum in SHFE zinc. The SHFE 1908 contract is expected to trade rangebound between 19,900-20,400 yuan/mt today.

Nickel: Three-month LME nickel slid to a low of $11,605/mt on Friday before it finished the trading day 0.47% lower at $11,620/mt. Support was seen at the lower Bollinger band. LME nickel is expected to trade between $11,550-11,750/mt today, with SHFE nickel at 94,500-96,000 yuan/mt. Spot prices are seen at 94,500-96,500 yuan/mt.

Lead: Three-month LME lead came off from earlier highs on Friday, dropping 2.39% to close at $1,840.5/mt on Friday, as risk aversion grew ahead of the weekend and after a disappointing US jobs number which boosted fears of an economic slowdown. LME lead’s slump on Friday returned the contract to its previous range, and will deter speculative longs from entering the market. LME lead is expected to hover around $1,800/mt in the short term.

Tin: Three-month LME tin climbed to a high of $19,500/mt on Friday before it gave up all those gains to close the trading day flat at $19,250/mt. Support is seen at $18,500/mt, while resistance is at $19,500/mt, with next resistance at the 40-day moving average as high as $19,600/mt. SHFE tin is expected to remain rangebound at lows today, as its LME counterpart remains under pressure and as demand for spot cargoes is weak. Support is seen at 142,000 yuan/mt while resistance is at 144,500 yuan/mt.