SMM Morning Comments (Dec 17)

SHANGHAI, Dec 17 (SMM) –

Copper: LME copper recovered to the $6,140/mt level on Friday after hovering around $6,010/mt. Despite a negative open, the SHFE 1902 contract climbed to close at 49,210 yuan/mt on Friday night. We expect copper prices to remain rangebound at lows today. LME copper is likely to trade at $6,100-6,160/mt with the SHFE 1902 contract at 48,900-49,400 yuan/mt. Spot premiums are seen up to 80 yuan/mt.

Aluminium: After opening lower, the SHFE 1902 contract climbed on Friday night and closed at 13,665 yuan/mt. We expect it 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. LME aluminium dropped to a low of $1,918/mt on Friday before it recovered some losses to end at $1,925.5/mt. The stronger US dollar is expected to continue to weigh on LME aluminium, which is likely to trade at $1,915-1,935/mt today.

Zinc: LME zinc tumbled to close at $2,533/mt on Friday, below all moving averages. Gains in stocks across LME-registered warehouses hampered the support from low inventories while downbeat economic data dented risk appetite among investors. LME zinc is expected to trade at $2,510-2,560/mt today. After a lower open, the SHFE 1902 contract crept to close at 20,845 yuan/mt. This helped the contract to regain losses made on Friday. Decreasing inventories in China limited the losses in SHFE zinc while moving averages continued to pose resistance. The SHFE 1902 contract is expected to trade at 20,550-21,000 yuan/mt today.

Nickel: LME nickel rebounded in late trading on Friday and ended at $11,040/mt. The SHFE 1905 contract surged to close at 90,510 yuan/mt on Friday night as a second straight weekly decline in inventories in China improved confidence among longs. LME nickel is expected to hover around $10,900/mt today with the SHFE 1905 contract at 89,000-90,500 yuan/mt. Spot prices are seen at 89,500-97,000 yuan/mt.

Lead: LME lead touched a two-week low of $1,928/mt on Friday before it recovered those losses to close at $1,954/mt on news that China would roll back tariffs on US car imports for three months. With strong resistance at moving averages, LME lead is expected to continue to hover below moving averages today. Losses in its LME counterpart depressed the SHFE 1901 contract to a low of 18,290 yuan/mt on Friday before the contract rebounded to the 20-day moving average, ending at 18,400 yuan/mt. Weak fundamentals are likely to keep the contract around the 20-day moving average today.

Tin: LME tin stemmed its uptrend on Friday and hovered at highs to end at $19,390/mt. Resistance is seen at $19,700/mt. The SHFE 1905 contract climbed above the five- and 10-day moving averages and closed at 146,650 yuan/mt on Friday night. The contract remained rangbound with resistance at 147,500 yuan/mt and support at 145,000 yuan/mt. It is expected to remain rangebound into the near term.