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SMM Morning Comments (Dec 5)
Dec 5,2019 09:45CST
price review forecast
SHFE base metals traded mixed overnight


Copper: Copper prices rallied from two-week lows overnight on renewed optimism on a US-China trade deal. Lingering uncertainty around trade talks and heightened concerns about US economy after the recent release of disappointing data, however, capped gains in copper prices. Three-month LME copper advanced 1.03% to end Wednesday at $5,875/mt, while the most active SHFE 2001 contract gained 0.62% in overnight trading to close at 47,270 yuan/mt. Copper prices are likely to trade rangebound today, with LME copper at $5,850-5,880/mt and SHFE copper at 47,000-47,350 yuan/mt. Spot premiums are seen firmer at 150-180 yuan/mt, as sellers are unwilling to lower their offers amid tight availability and with the year drawing to a close.

Aluminium: Three-month LME aluminium erased earlier gains to its lowest in more than one week at $1,748/mt on Wednesday, before it recovered some ground to close down 0.54% at $1,758.5/mt. The unwinding of long positions primary accounted for the loss in prices, which bucked the uptrend across most nonferrous metals. The most traded SHFE 2001 contract recovered from earlier losses to end a tad lower at 13,940 yuan/mt overnight. It is likely to waver between 13,890-14,000 yuan/mt today, with spot premiums of 50-70 yuan/mt over the SHFE 1912 contract. SMM will release its weekly primary aluminium inventories data today.

Zinc: Three-month LME zinc rose on Wednesday after a five-day slide, and advanced 1.78% to end the day at $2,253/mt. It remains under the pressure from the five-day moving average and supported by the lower Bollinger band, and is expected to move between $2,220-2,270/mt today. A higher open took the most active SHFE 2001 contract out of its recent range overnight, before the contract closed 1.35% higher at a session-high of 18,015 yuan/mt. Whether SHFE zinc could remain above 18,000 yuan/mt will come under scrutiny today. The SHFE 2001 contract is expected to trade between 17,700-18,200 yuan/mt, and spot premiums for domestic 0# Shuangyan are seen higher at 400-440 yuan/mt over the SHFE 1912 contract amid supply shortages and robust consumption.

Nickel: Three-month LME nickel extended its decline to a new low in nearly five months at $13,115/mt on Wednesday, before it finished the trading day 1.65% lower at $13,140/mt, keeping further away from the five-day moving average. Support at $13,000/mt will come under scrutiny today. The most traded SHFE 2002 contract hovered in a tight range around 104,300 yuan/mt overnight, and closed down 1.24% at 104,000 yuan/mt. SHFE nickel is further away from the five-day moving average and nearing the lower Bollinger band. Whether SHFE nickel could hold above 103,000 yuan/mt should be closely watched today.

Lead: Three-month LME lead rebounded from five-month lows on Wednesday, gaining 0.87% to $1,913.5/mt. While LME lead appears to be taking a breather amid US-China trade deal optimism, it has yet to derail from the downtrend and is likely to see further downside. The most active SHFE 2001 contract followed its LME counterpart higher to a session-high of 15,145 yuan/mt overnight, before closing up 0.7% at 15,125 yuan/mt. Despite some short-lived rallies, SHFE lead is still likely to weaken in the short term.

Tin: Three-month LME tin rose to a five-week high of $16,850/mt on Wednesday, before it eased to end 0.24% higher at $16,730/mt. LME tin has stood above all near-term moving averages, with immediate resistance at a previous high of $16,800/mt. Next resistance is seen at $17,000/mt. The most traded SHFE 2001 contract shed 0.25% to end at 138,630 yuan/mt overnight. Resistance lies at 139,500 yuan/mt, while support is at 138,000 yuan/mt. 

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