SMM Morning Comments (Dec 3)

SHANGHAI, Dec 3 (SMM) –

Copper: LME copper fluctuated to close at $6,198.5/mt on Friday night and is expected to trade at $6,190-6,240/mt today. The SHFE 1902 contract inched up to close at 49,690 yuan/mt on Friday night and is likely to trade at 49,400-49,900 yuan/mt today. In the physical market, purchasing enthusiasm among buyers might be thin at the beginning of the month while limited cargoes on hand might prompt sellers to hold their premiums firm.

Aluminium: LME aluminium ended at $19,500/mt on Friday night after surging through the 20-day moving average to a high of $1,959/mt. We expect it to trade rangebound at $1,940-1,960/mt today. The SHFE 1901 contract jumped past the 40-day moving average to the 14,000 yuan/mt level before it erased some gains to close at 13,755 yuan/mt on Friday night. It is expected to continue its rally today with a trading range of 13,720-13,850 yuan/mt with spot discounts at 80-40 yuan/mt. Chalco’s announcement on Friday of shutting 470,000 mt of aluminum capacity, together with winter production curbs, is likely to temporarily reverse the direction of SHFE aluminium prices.

Zinc: LME zinc surged to a high of $2,540/mt on Friday night as longs added their bets ahead of the  Trump-Xi meeting in Argentina. The three-month contract closed at $2,535.5/mt, up over 3% from the previous day’s close. This helped it recover all the losses made earlier in the week. LME zinc is expected to extend its gains today with most transactions at $2,520-2,570/mt. The SHFE 1902 contract jumped past the 10- and 20-day moving averages to close at 20,700 yuan/mt after a positive start on Friday night. The steep gains helped the contract to pare most losses made in the six-day losing streak. We expect the contract to further rise today with a trading range of 20,500-20,950 yuan/mt.

Nickel: LME nickel closed at $11,095/mt on Friday night after hitting a high of $11,200/mt. The SHFE 1901 contract climbed to close at 91,900 yuan/mt after earlier dips. Today, LME nickel is likely to edge up when hovering around $11,100/mt; the SHFE 1901 contract is expected to trade at 90,500-92,500 yuan/mt with spot prices at 90,500-101,000 yuan/mt.

Lead: LME lead ended at $1,953/mt on Friday night after jumping past the 10-, 20- and 40-day moving averages to a high of $1,982/mt. This helped the contract stand above the five-day moving average. The contract is expected to rise today with improved risk sentiment among investors. Riding on gains in its LME counterpart, the SHFE 1901 contract crept to close at 18,460 yuan/mt after a higher open on Friday night. This sent the contract close to a previous high of 18,585 yuan/mt. This high is likely to be broken today as a temporary trade truce between the US and China improves market sentiment.

Tin: LME tin edged down to close at 18,430 yuan/mt on Friday night. We see resistance at $18,800/mt for LME tin. Short-covering pushed the SHFE 1901 contract up to close at 144,450 yuan/mt on Friday night. We expect the contract to strengthen today with resistance at 146,200 yuan/mt.