SMM Morning Comments (Dec 21)

Published: Dec 21, 2018 09:42

Save

SMM Morning Comments

SHANGHAI, Dec 21 (SMM) –

Copper: Copper prices weakened overnight following the rout on Wall Street. LME copper finished Thursday some 0.8% lower at $6,017.5/mt. The SHFE 1902 contract came off from a high of 48,600 yuan/mt to end at 48,230 yuan/mt overnight. Worries over economic growth and an overnight plunge in oil prices are expected to keep copper prices weak today. LME copper is likely to trade at $5,880-6,060/mt with the SHFE 1902 contract at 48,100-48,600 yuan/mt. Spot premiums are seen at 50-170 yuan/mt.

Aluminium: After a higher open, the SHFE 1902 contract hovered between the five- and 20-day moving averages overnight and ended at 13,680 yuan/mt. The contract is expected to trade at 13,600-13,700 yuan/mt today with spot discounts at 90-50 yuan/mt. LME aluminium traded higher on Thursday and ended at $1,915.5/mt as the US dollar index fell below 97. With weakness in the dollar, LME aluminium is likely to rebound slightly and trade at $1,915-1,930/mt today.

Zinc: LME zinc fluctuated to close lower at $2,573.5/mt on Thursday. With cautious investors and a lack of direction in short-term moving averages, LME zinc is expected to hold stable and trade at $2,520-2,570/mt today. The SHFE 1902 contract jumped during earlier trades overnight and ended at 21,115 yuan/mt. SHFE zinc traded steadily with support at the 10- and 60-day moving averages. Despite tightening supplies in the spot market, SHFE zinc is unlikely to rally strongly in a low season of consumption. It is expected to trade at 20,850-21,250 yuan/mt today.

Nickel: LME nickel fluctuated to close lower at $10,955/mt on Thursday. The SHFE 1905 contract pared some earlier gains overnight and closed 0.3% higher at 90,110 yuan/mt. Nickel prices are expected to remain rangebound in the near term. LME nickel is likely to hover around $10,900/mt and the SHFE 1905 contract is expected to trade at 89,000-90,500 yuan/mt. Spot prices are seen at 89,500-95,500 yuan/mt.

Lead: LME lead moved out of a range at lows to a high of $1,982/mt on Thursday and closed at $1,974.5/mt, with pressure at the 60-day moving average. Strong pressure remains at $2,000/mt. After opening higher, the SHFE 1902 contract climbed overnight and ended at 18,120 yuan/mt. Standing above moving averages, the contract is expected to continue to trade rangebound.

Tin: Moving above the five-day moving average, LME tin inched up on Thursday and closed at $19,320/mt. It is expected to strengthen with weakness in the US dollar, with resistance at $19,500/mt. The SHFE 1905 contract continued its rangebound pattern overnight and ended at 146,340 yuan/mt. Without a clear direction, the contract is likely to remain rangebound into short term with resistance at 147,500 yuan/mt and support at 145,000 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.

For any inquiries or to learn more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

33 mins ago

This Week, Copper Inventories in China's Major Regions Continued Destocking [SMM Weekly Data]

33 mins ago

1 hour ago

Copper Prices Drop Below 96,000 Yuan/mt, Prompting Increased Orders and Higher Processing Fees

【SMM Copper Cathode Rod Flash News】Copper prices pulled back sharply and fell below the 96,000 yuan/mt mark, prompting downstream enterprises to engage in concentrated procurement, while new orders received by copper cathode rod enterprises increased significantly starting from the night session. To manage the pace of taking orders, enterprises raised processing fees one after another; meanwhile, due to the surge in order volumes and concerns over downstream cargo pick-up progress, some enterprises have already increased deposits to control risks.

1 hour ago

Copper Prices Pulled Back, Stimulating Downstream Purchasing Enthusiasm; Destocking Accelerated, but Suppliers Sold on Strength, and Spot Premiums Rose First and Then Came Under Pressure [SMM Shanghai Spot Copper]

[SMM Shanghai Spot Copper] During the day, the SHFE copper 2604 contract extended its decline, with the trading range falling further to 95,500-96,000 yuan/mt. The center of copper prices kept moving lower, significantly stimulating downstream enterprises' demand to buy the dip and restock, while spot market trading sentiment clearly recovered. Demand side, according to SMM, most downstream enterprises saw a surge in order volumes, with a substantial increase from the previous period, and end-user cargo pick-up enthusiasm also improved in tandem. The pullback in copper prices became more attractive to enterprises, and purchase willingness to buy the dip was strong. Suppliers held prices firm accordingly, driving a notable rebound in spot premiums in early trading. Supply side, social inventory destocked sharply by 24,200 mt from Monday, and the pace of destocking accelerated. The rebound in spot premiums raised suppliers' willingness to sell, leading to more warrants flowing into the market. As premiums reached the psychological expectations of some suppliers, selling of spot warrants began to emerge, easing the previously tight spot supply situation and causing spot premiums to decline later. Overall, current copper prices have become more attractive to downstream enterprises, and faster destocking supports the spot market, but suppliers' selling at high levels combined with changes in the price spread between futures contracts structure put pressure on premiums. Under the tug-of-war between sellers and buyers, Shanghai spot copper is expected to remain in a tug-of-war pattern tomorrow, with premiums likely to stay in the discount range.

1 hour ago