SHANGHAI, Jul 5 (SMM) –
Copper: LME copper tumbled further after it broke support at $6,500/mt, touching a low of $6,344/mt as SHFE base metals dipped across the board amid intensified worries over a trade war. The SHFE 1808 contract also slumped all the way after opening, to a low at 49,180 yuan/mt before closing at 49,680 yuan/mt. We expect LME copper to trade at $6,360-6,420/mt, and SHFE 1808 at 49,400-49,900 yuan/mt today. Spot discounts are likely to narrow further today as futures prices plunge. Offers are seen at a discount of 10 yuan/mt to a premium of 50 yuan/mt.
Aluminium: As US-China tariffs implementation loomed, LME aluminium wakened to a low of $2,083/mt before rebounding to $2,103/mt. Open interests increased 330 lots to 670,367 lots last night. It is expected to trade at $2,080-2,115/mt today. The SHFE 1808 contract also rebounded to 14,000 yuan/mt level after it dipped to 13,940 yuan/mt on falling SHFE copper and zinc contracts. The 1808 contract saw its open interests declined 2,716 lots to 191,376 lots, while that of 1809 contract rose 3,460 lots to 253,114 lots. The 1808 contract is expected to trade at 13,900-14,050 yuan/mt today, with spot discounts at 60-20 yuan/mt.
Zinc: LME zinc led the losses among base metals overnight and closed over 2.5% lower at $2,710/mt. It touched $2,687.5/mt, a record low since June last year. Amid bearish sentiment, it is likely to weaken further today and trade at $2,675-2,725/mt. The SHFE 1808 contract was also in a downward trend as it failed to stand at 22,200 yuan/mt, diving to a low of 21,880 yuan/mt. It closed at 22,080 yuan/mt, down 290 yuan/mt from the previous day. Trading range is set at 21,800-22,300 yuan/mt today.
Nickel: LME nickel traded weakly last night, falling below the $14,000/mt level. This was despite a 732-mt decline in LME inventory as worries over the trade war intensified. The SHFE 1809 contract moved back up to around the daily moving average as it received support at the 110,000 yuan/mt level. It is expected to trade at 110,000-112,000 yuan/mt today with LME nickel at around $14,000/mt. Spot prices are seen at 110,500-112,500 yuan/mt today.
Lead: LME lead recovered some losses overnight after plummeting to a low of $2,307/mt on risk aversion. It closed far away from the moving averages above and we see a downward trend for it. The SHFE 1808 contract fell for five consecutive trading days and lost all the previous gains to a rangebound trading level. It is likely to test support at the 19,500 yuan/mt level in the near term.
Tin: LME tin fell overnight and touched a low of $19,500/mt. We expect it to remain weak today with support at the $19,300/mt. The SHFE 1809 contract extended its decline and closed below all the moving averages overnight. The looming tariffs deadline continued to suppress the market sentiment. We expect the contract to remain weakly rangebound today with a possibility to fall. Support is seen at the 143,000 yuan/mt.