SMM Morning Comments (Dec 14)

Published: Dec 14, 2018 09:41

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SMM Morning Comments

SHANGHAI, Dec 14 (SMM) –

Copper: LME copper pared earlier gains to close at $6,153/mt on Thursday. The SHFE 1902 contract came off from a high of 49,440 yuan/mt overnight, ending at 49,260 yuan/mt. As the US dollar strengthened, copper prices are expected to remain rangebound at lows today. LME copper is likely to trade at $6,150-6,200/mt with the SHFE 1902 contract at 49,000-49,500 yuan/mt. Spot premiums are seen lower at 20-70 yuan/mt.

Aluminium: The SHFE 1902 contract recovered some earlier losses to close at 13,615 yuan/mt overnight. A weekly decline of 57,000 mt in social stocks in China provided some support to SHFE aluminium prices. We expect the contract to trade at 13,600-13,700 yuan/mt today with spot prices at discounts of 20 yuan/mt to premiums of 20 yuan/mt. Despite a higher open, LME aluminium reversed earlier gains and slid to close at $1,930/mt on Thursday. We expect it to remain weak today with most transactions at $1,925-1,945/mt.

Zinc: LME zinc fluctuated to close 0.35% higher at $2,575/mt on Thursday. Stocks across LME-registered warehouses stayed low and the LME zinc cash/three-month price backwardation remained wide. Uncertainties over macro economy diverge shorts and longs and we expect LME zinc to trade at $2,560-2,610/mt today. The SHFE 1902 contract tumbled to a low of 20,850 yuan/mt overnight before it rebounded to close at 20,980 yuan/mt. The contract held onto the 20,980 yuan/mt level and is expected to remain rangebound today trading between 20,750-21,150 yuan/mt.

Nickel: LME nickel initially fell to a low of $10,725/mt, just above the year-low of $10,720/mt on November 27. It then clawed back those losses to close 0.6% higher at $10,850/mt. The SHFE 1905 contract fluctuated to close 0.4% higher at 89,380 yuan/mt overnight. Market focus is largely attuned to the fundamentals as investors await an upcoming two-day meeting of the Federal Open Market Committee (FOMC), which is scheduled to take place on December 18-19. The recent improvement in spot trades limited losses in nickel prices. 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.

Lead: As the US dollar climbed, LME lead dropped past all moving averages to end at $1,947/mt on Thursday. After a slightly lower open, the SHFE 1901 contract crept to close at 18,495 yuan/mt overnight. It is expected to remain rangebound at highs before the delivery date and might fall after the delivery.

Tin: LME tin extended its gains on Thursday and closed at $19,455/mt. The SHFE 1905 contract inched up to close at 146,840 yuan/mt overnight. With supply cuts across Chinese tin producers, tin prices are expected to strengthen into the near term. Resistance is seen at $19,700/mt for LME tin and its SHFE counterpart is likely to test the 147,500 yuan/mt level.

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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