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SMM Morning Comments (Jul 9)


Copper: LME copper consolidated around the daily moving average at $6,300/mt during the European trading session, after rising to a high of $6,334/mt on weaker US dollar. It closed at $6,308.5/mt, down $15.5/mt from the previous trading day. The SHFE 1809 contract was pushed up by longs to a high of 49,380 yuan/mt last Friday night, and closed at that level. As downstream consumption remained steady in July on dipping copper prices, we expect LME copper to trade at $6,320-6,400/mt today with the SHFE 1809 contract at 49,300-49,900 yuan/mt. Spot offers are seen at a discount of 20 yuan/mt to a premium of 30 yuan/mt.

Aluminium: LME aluminium dipped at a slower pace last Friday night as it rebounded from a low of $2,071/mt on weakened US dollar. With pressure at the five-day moving average, it closed at $2,086.5/mt with trading range expected at $2,075-2,095/mt today. The SHFE 1809 contract rose to a high of 14,130 yuan/mt as longs added their positions after digesting the US-China trade tariffs. It closed at 14,120 yuan/mt with resistance at the 10-day moving average. The contract is expected to trade at 14,050-14,200 yuan/mt today, with spot discount at 40-0 yuan/mt.

Zinc: LME zinc rebounded to the daily moving average and climbed up to close $58/mt higher at $2,753/mt, as the US dollar index dipped on lower-than-expected wage data. However, as the market remains cautious on uncertainties over the macroeconomy, it is likely to trade rangebound at $2,720-2,770/mt. The main contract of SHFE zinc moved from 1807 to 1808 last Friday night. The latter rose to a high of 22,170 yuan/mt on declining social inventories in the domestic market. It is expected to hover at 21,800-22,300 yuan/mt today.

Nickel: LME nickel recovered some losses after touching a low of $13,830/mt last Friday night. The SHFE 1809 contract fell to the daily moving average after it failed to hit 111,500 yuan/mt. We expect LME nickel to trade weakly rangebound around the $14,000/mt level today with the SHFE 1809 contract at 110,000-111,500 yuan/mt. Spot prices are seen at 110,500-112,500 yuan/mt.

Lead: LME lead was dragged down by its SHFE counterpart to below the daily moving average, but it recovered part of the losses and rose to $2,358/mt as the US dollar declined. The SHFE 1808 contract received support at 19,500 yuan/mt as it fell from a high of 19,675 yuan/mt, and closed at 19,625 yuan/mt. It is likely to rebound today.

Tin: LME tin deepened its losses last Friday night given growing LME inventory and the US-China trade war. It is likely to test support at the $19,300/mt level in the near term. The next support level is seen at $19,000 yuan/mt. The SHFE 1809 contract continued to hover around low levels last Friday night. We expect it to remain weak in the short term given its weak LME counterpart. It is likely to test support at the 143,000 yuan/mt level in the near term, and the next support level is at 140,000 yuan/mt.