SMM Morning Comments (Dec 24)

Published: Dec 24, 2018 09:40 (GMT+8)

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SMM Morning Comments

SHANGHAI, Dec 24 (SMM) –

Copper: As the US dollar index recovery prompted longs to cover their positions, LME copper came off from earlier highs of $6,027/mt on Friday and closed at $5,978/mt. As shorts added their bets, the SHFE 1902 contract dropped to a low of 48,120 yuan/mt and closed at 48,210 yuan/mt on Friday night after it initially climbed to a high of 48,510 yuan/mt. Copper prices are expected to remain at lows today with thin liquidation over Christmas. LME copper is likely to trade at $5,975-6,030/mt with the SHFE 1902 contract at 48,100-48,500 yuan/mt. Spot premiums are seen at 70-120 yuan/mt.

Aluminium: The SHFE 1902 contract initially rose to a high of 13,780 yuan/mt on Friday night as longs added their positions. It then fell to close at 13,725 yuan/mt, above the five-day moving average, as longs were keen to take profits at the 40-day moving average. China aluminium firms met last week to discuss output cuts, which provided support to SHFE aluminium prices. The contract is expected to trade at 13,700-13,800 yuan/mt today with spot discounts at 80-40 yuan/mt. LME aluminium fell to close at $1,907/mt on Friday as the US mulled lifting Rusal sanctions. It is expected to continue to fall with most transactions at $1,890-1,920/mt today.

Zinc: LME zinc fell past the $2,500/mt level and ended at $2,489/mt on Friday after the US dollar rebounded. As shorts built their positions, the SHFE 1902 contract slid to close at 20,790 yuan/mt on Friday night as political and economic concerns as well as cooling consumption weighed on the contract. This lowered the contract below several moving averages. The SHFE 1902 contract is expected to trade at 20,600-21,000 yuan/mt today.

Nickel: Nickel prices are expected to trade rangebound today. The SHFE 1905 contract is expected to trade between the five- and 10-day moving averages today with a trading range of 89,800-90,200 yuan/mt. Spot prices are seen at 90,000-94,500 yuan/mt. LME nickel fluctuated to close some 0.7% lower on Friday.

Lead: LME copper tumbled past all moving averages to a low of $1,937/mt on Friday before it regained some losses to close at $1,961.5/mt. Standing above moving averages, it is expected to remain rangebound in the short term. With a weak LME counterpart, the SHFE 1902 contract posted a negative open and hovered in a 50 yuan/mt range on Friday night, ending at 17,960 yuan/mt. Its five- and 10-day moving averages expanded downwards while support remained at the 40-day moving average.

Tin: LME tin extended its gains to close at $19,390/mt on Friday. Resistance is seen at $19,500/mt. The SHFE 1905 contract weakened to end at 146,690 yuan/mt on Friday night after its initial increase. It is likely to remain rangebound today with resistance at 147,500 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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