SMM Morning Comments (Dec 6)

SHANGHAI, Dec 6 (SMM) –

Copper: LME copper rebounded to close at $6,193.5/mt overnight as shorts cut their bets after the contract fell to a low of $6,158.5/mt. LME copper snapped a four-day losing streak and came under pressure at the five- and 10-day moving averages. With a lower open, the SHFE 1902 contract fluctuated to close at 49,310 yuan/mt overnight. This lowered it below all short-term moving averages and the middle Bollinger band. Open interest for the SHFE copper complex decreased below 500,000 lots, reflecting limited confidence among investors. LME copper is expected to trade at $6,140-6,190/mt today with the SHFE 1902 contract at 49,100-49,400 yuan/mt. Spot premiums are seen at 130-300 yuan/mt. In the physical market, sellers were reluctant to offload cargoes and this tightened supplies across the market.

Aluminium: After a negative open, the SHFE 1901 contract fluctuated to close lower at 13,710 yuan/mt overnight, posting a two-day losing streak. As fundamentals remained weak, the contract remained subdued and is expected to trade at 13,650-13,750 yuan/mt today with spot discounts at 70-30 yuan/mt. LME aluminium outperformed its SHFE counterpart overnight and traded marginally higher at $1,973/mt. It is expected to trade at $1,950-1,980/mt today.

Zinc: LME zinc climbed to close at $2,621.5/mt overnight. The gain could be attributed to the wider LME zinc cash/three-month price backwardation as LME inventories shrank. With short-term moving averages pointing towards bullish signals, we expect LME zinc to strengthen today with most transactions at $2,580-2,630/mt. After hovering just below the 21,000 yuan/mt level, the SHFE 1902 contract jumped to close at 21,075 yuan/mt overnight on short-covering. With low inventories, SHFE zinc remains on a rise and is expected to trade at 20,700-21,200 yuan/mt today.

Nickel: LME nickel rebounded from earlier lows and closed at $11,220/mt overnight. After initially falling to a low of 90,250 yuan/mt, the SHFE 1901 contract clawed back losses and ended at 91,250 yuan/mt overnight. Investors remained cautious on lingering concerns over US-China trade. LME nickel is likely to hover around at $11,100/mt today with the SHFE 1901 contract at 90,000-91,500 yuan/mt. Spot prices are seen at 90,500-99,000 yuan/mt.

Lead: Meeting strong resistance at $2,000/mt, LME lead slid to close at $1,986/mt overnight. Moving along the five-day moving average, it is expected to continue to test the $2,000/mt level in the near term. The SHFE 1901 contract pared some gains to close at 18,580 yuan/mt overnight after climbing to a high of 18,630 yuan/mt. Trading volumes continued to shrink when the contract hovered around highs for three consecutive days. 

Tin: LME tin hovered just above the $19,000/mt level and ended at $19,145/mt overnight, with resistance at $19,400/mt. We expect it to remain rangebound in the short term with support at $18,800/mt. The SHFE 1901 contract traded rangebound above the five- and 10-day moving averages and closed at 145,500 yuan/mt overnight. Uncertainties over US-China trade kept SHFE tin trading rangebound, with resistance at 146,500 yuan/mt.