SMM Morning Comments (Dec 27)

SHANGHAI, Dec 27 (SMM) –

Copper: After a higher open, the SHFE 1902 contract slid to a low of 48,160 yuan/mt overnight. It then regained those losses to end at 48,440 yuan/mt as shorts cut their bets. Open interest for the SHFE copper complex decreased below 500,000 lots. LME copper is expected to trade at $5,990-6,040/mt today with the SHFE 1902 contract at 48,100-48,550 yuan/mt. Spot prices are seen at discounts of 30 yuan/mt to premiums of 50 yuan/mt.

Aluminium: The SHFE 1902 contract initially dropped to a low of 13,730 yuan/mt overnight as longs aggressively reduced positions. It hovered between the 20- and 40-day moving averages to end at 13,765 yuan/mt. The contract is expected to trade at 13,720-13,800 yuan/mt today with spot discounts at 110-70 yuan/mt. LME aluminium is likely to try to regain losses made before Christmas Day, and trade at $1,880-1,910/mt.

Zinc: The SHFE 1902 contract surged to close at 21,045 yuan/mt overnight. This helped it recover most losses made earlier in the week and to stand above moving averages. It is likely to struggle to hold onto its ground today with a trading range of 20,700-21,150 yuan/mt. Gains in SHFE zinc and improved risk sentiment is likely to push LME zinc above $2,500/mt today with most transactions at $2,480-2,520/mt.

Nickel: The SHFE 1905 contract rebounded overnight after it fell to a low of 87,760 yuan/mt as shorts took profits. It finished some 0.5% higher at 88,790 yuan/mt. As rebounds in stocks and oil prices improve risk sentiment among investors and with brisk purchasing enthusiasm among steel mills in the Chinese spot markets, the SHFE 1905 contract is expected to extend its gains today with a trading range of 88,000-89,500 yuan/mt. LME nickel is likely to hover around $10,900/mt. Spot prices are seen at 88,000-92,000 yuan/mt.

Lead: Rebounds on Wall Street overnight drove the SHFE 1902 lead contract to end some 0.8% higher at 17,905 yuan/mt. This stemmed recent declines in SHFE lead prices.

Tin: The SHFE 1905 contract climbed from lows overnight, towards the five-day moving average and ending at 145,580 yuan/mt. It is expected to trade rangebound today with resistance at 146,000 yan/mt and support at 143,000 yuan/mt.

The LME closed for Boxin Day on Wednesday.