SMM Morning Comments (Dec 25)

SHANGHAI, Dec 25 (SMM) –

Copper: LME copper extended its losses to end at $5,959/mt on Monday and touched a three-month low of $5,941/mt during American trading hours. The SHFE 1902 contract fluctuated to end at 48,020 yuan/mt overnight. Most markets will shut for Christmas today, and SHFE copper is expected to continue to hover at lows with most transactions at 47,850-48,250 yuan/mt.

Aluminium: The SHFE 1902 contract jumped to a high of 13,825 yuan/mt overnight as longs aggressively built their positions. It then came off to close at 13,785 yuan/mt as shorts added their bets. Social inventories of primary aluminium in China saw a smaller decline of 4,000 mt over the weekend while consumption remained sluggish. The SHFE 1902 contract is expected to trade at 13,700-13,800 yuan/mt today with spot discounts at 90-50 yuan/mt. Despite a higher open, LME aluminium fell on Monday and closed at $1,883/mt, as news that US intends to remove Rusal sanctions weighed.

Zinc: LME zinc pared earlier gains to close lower at $2,485/mt on Monday. The SHFE 1902 contract posted a negative start and ended at 20,645 yuan/mt overnight. Shrinking demand weighed on prices even with continued support at 20,500 yuan/mt. The contract is expected to trade at 20,400-20,800 yuan/mt today.

Nickel: As oil prices declined, LME nickel relinquished earlier gains to close flat at $10,875/mt on Monday. The SHFE 1905 contract edged down to close at 90,030 yuan/mt overnight. Investors were cautious overnight, with trading volumes thinning. SHFE nickel is expected to trade rangebound today as the year-end eroded trading enthusiasm among investors. The SHFE 1905 contract is likely to trade between the five- and 10-day moving averages today with a range of 89,900-90,500 yuan/mt. Spot prices are seen at 90,500-93,500 yuan/mt.

Lead: As the US dollar weakened, LME lead broke through the 60-day moving average to a high of $1,995/mt on Monday and closed 1.3% higher at $1,987/mt. If the greenback extends its losses, LME lead is likely to break through the $2,000/mt level. The SHFE 1902 contract opened higher and inched up to end at 18,035 yuan/mt overnight. The contract remained rangebound without a clear direction.

Tin: LME tin came off from earlier highs on Monday and closed at $19,300/mt. Resistance is seen at $19,500/mt with support at $19,100/mt. The SHFE 1905 contract fell overnight, before it hovered around 146,500 yuan/mt and finished at 146,380 yuan/mt. The contract is expected to continue its rangebound pattern today.