SMM Morning Comments (Dec 5)

Published: Dec 5, 2018 09:41

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SMM Morning Comments

SHANGHAI, Dec 5 (SMM) –

Copper: LME copper fell to close at $6,168.5/mt overnight as shorts built their bets on the recovery of the US dollar. The SHFE 1902 contract slid to close at 49,230 yuan/mt after a lower open overnight. Copper prices are likely to remain rangebound at lows today with a trading range of $6,150-6,200/mt for LME copper and of 49,200-49,700 yuan/mt for the SHFE 1902 contract. Spot premiums are seen at 110-260 yuan/mt.

Aluminium: The SHFE 1901 contract overnight slid through the 20-day moving average to a low of 13,740 yuan/mt, near the 10-day moving average, as shorts aggressively added their positions after the contract jumped to a high of 13,835 yuan/mt shortly after the opening bell. The contract regained some losses in later trades and closed at 13,770 yuan/mt. We expect it to trade at 13,700-13,800 yuan/mt today with spot discounts at 70-30 yuan/mt. A rebound in the US dollar index forced LME aluminium to reverse its gains made in European trades, to a low of $1,963/mt. LME aluminium ended at $1,970/mt overnight, below the 40-day moving average. We expect it to trade at $1,960-1,980/mt today.

Zinc: As the US dollar rebounded, LME zinc came off from a high of $2,610/mt and closed at $2,583.5/mt overnight. Low LME inventories and wide LME zinc cash/three-month price backwardation helped limit the losses in LME zinc. We expect LME zinc to climb today with most transactions at $2,550-2,600/mt. Despite a higher open, the SHFE 1902 contract fell into the red and closed at 20,785 yuan/mt. While current low inventories limit downside room for the contract, weaker consumption and an expected rise in long-term inventories will limit any upside room. We expect SHFE zinc to remain rangebound and test support at the 20-day moving average today with a trading range of 20,600-21,000 yuan/mt.

Nickel: LME nickel relinquished earlier gains and closed at $11,130/mt overnight as the US dollar climbed. The SHFE 1901 contract tumbled and closed at 90,740 yuan/mt overnight as gains in the dollar encouraged shorts to add bets and forced longs to cut bets. LME nickel is expected to weaken to hover around $11,100/mt today and the SHFE 1901 contract is expected to trade at 90,500-92,000 yuan/mt. Spot prices are seen at 90,500-99,500 yuan/mt.

Lead: LME lead ended at $1,993/mt overnight as some longs took profits after the contract jumped past all moving averages to a high of $2,009.5/mt. It is expected to test pressure at the $2,000/mt level in the short term. Bolstered by its LME counterpart, the SHFE 1901 contract started overnight trading with a higher open and climbed in later trades, settling at 18,590 yuan/mt. The contract moved along the five-day moving average with a looming short-term uptrend.

Tin: LME tin stood above all moving averages and closed at $19,170/mt overnight, with an intraday high of $19,225/mt. We expect it to extend its gains in the near term with resistance at $19,400/mt. The SHFE 1901 contract inched up overnight, ending at 145,800 yuan/mt. With continued tight ore supplies, output cuts across major tin producers in Yunnan and Jiangxi improve the tin fundamentals, fuelling the rally in prices after previous significant sell-offs.

Morning comments Copper Aluminium Zinc Lead Nickel Tin

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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