SMM Morning Comments (Dec 19)-Shanghai Metals Market

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SMM Morning Comments (Dec 19)

Price Review & Forecast 09:24:17AM Dec 19, 2018 Source:SMM

SHANGHAI, Dec 19 (SMM) –

Copper: Following the slump in oil prices, both LME and SHFE copper tumbled overnight. LME copper fell past all short-term moving averages to end at $5,956/mt. As shorts aggressively added their bets, the SHFE 1902 contract saw losses accelerate in later trades of overnight and ended at 48,090 yuan/mt. We do not expect a substantial rebound in copper prices today. LME copper is likely to trade at $5,950-6,040/mt with the SHFE 1902 contract at 48,000-48,500 yuan/mt. Spot premiums are seen up to 80 yuan/mt.

Zinc: LME zinc touched a low of $2,513.5/mt on Tuesday after LME zinc inventories expanded. It fell to a new low of $2,506.5/mt before it closed at $2,513.5/mt. It is likely to remain weak today with most transactions at $2,500-2,550/mt. With the decline in its LME counterpart and resistance at the 10- and 60-day moving averages, the SHFE 1902 contract reversed and fell to close at 20,825 yuan/mt overnight. While investors appeared keen to sell at highs, domestic supply bottlenecks and rising SHFE/LME price ratio would limit sell-offs. The SHFE 1902 contract is expected to trade at 20,650-21,100 yuan/mt today.

Nickel: LME nickel tumbled during later trades of Tuesday and closed at $10,840/mt. The SHFE 1905 contract slumped to close at 89,150 yuan/mt overnight as longs took profits after the contract climbed to a high of 91,380 yuan/mt. A widely expected Fed interest rate hike, fears of slowing global economic growth and downbeat economic data are likely to continue to weigh on LME nickel today. The SHFE 1905 contract is expected to trade at 88,500-90,000 yuan/mt with spot prices at 89,000-96,000 yuan/mt.

Lead: As the US dollar index came off from earlier highs, LME lead jumped to a high of $1,972.5/mt on Tuesday and ended at $1,958/mt. This helped the contract recover from Monday’s losses and stand above the five-day moving average. A strong LME lead also buoyed its SHFE counterpart overnight. The SHFE 1901 contract shrugged off resistance at the five-, 10- and 20-day moving averages to a high of 18,490 yuan/mt overnight and closed at 18,440 yuan/mt. While a sharp rebound overnight improved sentiment among longs, the fundamentals remain weak, which might limit upside room for SHFE lead.

Tin: LME tin extended its losses on Tuesday and closed at $19,140/mt. It is expected to remain under pressure in the short term with support at $19,000/mt. The SHFE 1905 contract edged down and ended at 145,800 yuan/mt overnight. The contract is expected to continue to trade under pressure in the near term with support at 145,000 yuan/mt.

Key Words:  Morning comments   Copper   Aluminium   Zinc   Lead   Nickel   Tin 

SMM Morning Comments (Dec 19)

Price Review & Forecast 09:24:17AM Dec 19, 2018 Source:SMM

SHANGHAI, Dec 19 (SMM) –

Copper: Following the slump in oil prices, both LME and SHFE copper tumbled overnight. LME copper fell past all short-term moving averages to end at $5,956/mt. As shorts aggressively added their bets, the SHFE 1902 contract saw losses accelerate in later trades of overnight and ended at 48,090 yuan/mt. We do not expect a substantial rebound in copper prices today. LME copper is likely to trade at $5,950-6,040/mt with the SHFE 1902 contract at 48,000-48,500 yuan/mt. Spot premiums are seen up to 80 yuan/mt.

Zinc: LME zinc touched a low of $2,513.5/mt on Tuesday after LME zinc inventories expanded. It fell to a new low of $2,506.5/mt before it closed at $2,513.5/mt. It is likely to remain weak today with most transactions at $2,500-2,550/mt. With the decline in its LME counterpart and resistance at the 10- and 60-day moving averages, the SHFE 1902 contract reversed and fell to close at 20,825 yuan/mt overnight. While investors appeared keen to sell at highs, domestic supply bottlenecks and rising SHFE/LME price ratio would limit sell-offs. The SHFE 1902 contract is expected to trade at 20,650-21,100 yuan/mt today.

Nickel: LME nickel tumbled during later trades of Tuesday and closed at $10,840/mt. The SHFE 1905 contract slumped to close at 89,150 yuan/mt overnight as longs took profits after the contract climbed to a high of 91,380 yuan/mt. A widely expected Fed interest rate hike, fears of slowing global economic growth and downbeat economic data are likely to continue to weigh on LME nickel today. The SHFE 1905 contract is expected to trade at 88,500-90,000 yuan/mt with spot prices at 89,000-96,000 yuan/mt.

Lead: As the US dollar index came off from earlier highs, LME lead jumped to a high of $1,972.5/mt on Tuesday and ended at $1,958/mt. This helped the contract recover from Monday’s losses and stand above the five-day moving average. A strong LME lead also buoyed its SHFE counterpart overnight. The SHFE 1901 contract shrugged off resistance at the five-, 10- and 20-day moving averages to a high of 18,490 yuan/mt overnight and closed at 18,440 yuan/mt. While a sharp rebound overnight improved sentiment among longs, the fundamentals remain weak, which might limit upside room for SHFE lead.

Tin: LME tin extended its losses on Tuesday and closed at $19,140/mt. It is expected to remain under pressure in the short term with support at $19,000/mt. The SHFE 1905 contract edged down and ended at 145,800 yuan/mt overnight. The contract is expected to continue to trade under pressure in the near term with support at 145,000 yuan/mt.

Key Words:  Morning comments   Copper   Aluminium   Zinc   Lead   Nickel   Tin