SMM Morning Comments (Dec 13)

Published: Dec 13, 2018 09:41

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SMM Morning Comments

SHANGHAI, Dec 13 (SMM) –

Copper: LME copper regained some losses after it fell to the day’s lows of $6,132/mt on Wednesday, ending at $6,150/mt. After opening lower, the SHFE 1902 contract hovered at 49,030-49,130 yuan/mt overnight and closed at 49,120 yuan/mt. A lack of inflation in November, UK Prime Minister Theresa May’s survival of a no-confidence vote and new US-China trade hopes weighed on the US dollar index overnight and supported copper prices. LME copper is expected to trade at $6,130-6,180/mt today with the SHFE 1902 contract at 49,000-49,400 yuan/mt. Spot premiums are seen at 40-120 yuan/mt.

Aluminium: Despite a higher open, the SHFE 1902 contract fell to a low of 13,550 yuan/mt overnight before it rebounded to end at 13,580 yuan/mt. SHFE aluminium is expected to remain rangebound with supply cuts and downstream restocking in the short term and declining costs in the medium term. The most traded February contract is expected to trade at 13,500-13,650 yuan/mt today with spot prices at discounts of 20 yuan/mt to premiums of 20 yuan/mt. While LME aluminium opened higher on Wednesday, it traded lower to end at $1,936/mt. As the US dollar index stays above 97, LME aluminium still faces pressure and is expected to be weak today with a trading range of $1,925-1,945/mt.

Zinc: A gain in zinc stocks across LME-registered warehouses dragged down LME zinc on Wednesday, forcing it to reverse earlier gains and close 1.19% lower at $2,566/mt. We expect it to remain weak today with most transactions at $2,550-2,590/mt. The SHFE 1902 contract inched down to close at 20,930 yuan/mt overnight. Further weakening consumption in December grew negative sentiment across the market, hampering positive sentiment triggered by tight supplies. Strong support, where the 10-, 40- and 60-day moving averages met, dissipated. We expect the contract to trade at 20,700-21,100 yuan/mt today.

Nickel: With a higher open, LME nickel edged up to close at $10,785/mt on Wednesday. The SHFE 1905 contract jumped to a high of 89,450 yuan/mt overnight before it closed at 89,000 yuan/mt. LME nickel is expected to hover around $10,800/mt today with the SHFE 1905 contract at 88,500-90,000 yuan/mt. Spot prices are seen at 89,000-96,500 yuan/mt. Fundamentals remained weak even as recent trade in the domestic spot market improved.

Lead: LME lead retreated from earlier highs to end 0.56% lower at $1,966.5/mt. It continued to trade ranegbound. The SHFE 1901 contract opened lower and initially declined to a low of 18,450 yuan/mt overnight. It then recovered losses to close into the black at 18,535 yuan/mt. The contract continued to hover at highs.

Tin: LME tin surged 1.44% to close at $19,345/mt on Wednesday. The SHFE 1905 contract traded rangebound between the five- and 10-day moving averages overnight and closed flat at 146,400 yuan/mt. Supply cuts across Chinese tin producers are set to buoy tin prices. Resistance is seen at $19,400/mt for LME tin, with subsequent resistance at $19,700/mt. The SHFE 1905 contract is expected to remain rangebound in the short term with resistance at 147,000 yuan/mt.

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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