SMM Morning Comments (Dec 28)

Published: Dec 28, 2018 09:38

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SMM Morning Comments

SHANGHAI, Dec 28 (SMM) –

Copper: LME copper pared some earlier losses to close 0.2% higher at $5,972/mt on Thursday. After a lower open, the SHFE 1902 contract inched down to close at 49,040 yuan/mt overnight. An overnight decline in US crude oil prices and a drop in China’s November industrial profits weighed on copper prices, which are likely to weaken today. LME copper is expected to trade at $5,940-6,000 yuan/mt today with the SHFE 1902 contract at 47,800-48,200 yuan/mt. Spot premiums are seen at 10-80 yuan/mt.

Aluminium: The SHFE 1902 contract fell to close at 13,565 yuan/mt overnight. Recent declines in alumina prices and a rebound in social stocks affirmed our expectations that aluminium prices would fall into the medium term. The contract is expected to trade at 13,520-13,650 yuan/mt today with spot discounts at 120-80 yuan/mt. LME aluminium extended its losses on Thursday as the removal of US sanctions on Rusal took a toll. It is expected to trade at $1,840-1,880/mt today.

Zinc: Despite a higher open, LME zinc fell to the week’s lows of $2,468/mt on Thursday. It closed some 0.2% higher at $2,491/mt. LME zinc sperformed poorly on the first day after the Christmas break and encountered strong resistance at $2,500/mt. It is expected to remain weak today with a trading range of $2,470-2,515/mt. The SHFE 1902 contract initially fell to 20,600 yuan/mt overnight before it recovered those losses to close at 20,700 yuan/mt. Slack supply and demand by year-end as well as limited growth in inventories are expected to keep SHFE zinc rangebound today with a trading range of 20,550-21,000 yuan/mt.

Nickel: LME nickel touched a 13-month low of $10,700/mt on Thursday and finished the trading day 1.4% lower at $10,720/mt. The SHFE 1905 contract hovered in a 400 yuan/mt range overnight and ended at 88,100 yuan/mt. Shorts aggressively loaded up their bets earlier in the week and might take profits today, also the last trading day of 2018. LME nickel is expected to hover around $10,800/mt today with the SHFE 1905 contract at 87,500-89,000 yuan/mt. Spot prices are seen at 88,700-91,000 yuan/mt.

Lead: LME lead surged past the $2,000/mt level on Thursday and closed the day 2.4% higher at $2,035.5/mt. This is likely to grow risk sentiment among investors. With a strong LME lead, the SHFE 1902 contract climbed overnight. With resistance at the 20-day moving average, the contract closed slightly higher at 18,010 yuan/mt.

Tin: LME tin moved above moving averages and ended 0.6% higher at $19,420/mt on Thursday. Losses in the US dollar provided some support to LME tin. It is expected to remain rangebound in the near term with resistance at $19,500/mt. The SHFE 1905 contract hovered around 144,700 yuan/mt and closed at 144,880 yuan/mt overnight. It continued to trade at lows as sluggish consumption across spot markets hampered sentiment across futures markets. The contract is expected to remain under pressure today with resistance at 145,700 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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