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SMM Morning Comments (Dec 6)
Dec 6,2019 09:40CST
price review forecast
SHFE base metals traded mixed overnight


Copper: Copper prices extended their gains overnight, as the US weakened to one-month lows and on expectations that OPEC will deepen production cuts. Gains in copper prices, however, were limited by persisting concerns about global economic growth, exacerbated by downbeat economic data released this week, and uncertainty around US-China trade talks. Three-month LME copper rose to a one-week high of $5,912/mt on Thursday, before it eased to finish the trading day 0.35% higher at $5,895.5/mt. The most active SHFE 2001 contract crept up to a high of 47,370 yuan/mt overnight, before closing up 0.19% at 47,250 yuan/mt. Copper prices are likely to remain rangebound today, with LME copper at $5,860-5,910/mt and SHFE copper at 47,100-47,400 yuan/mt. Spot premiums are seen lower at 130-160 yuan/mt as higher prices will sideline buyers, who show weaker purchasing interest with the year drawing to a close.

Aluminium: Three-month LME aluminium slipped to its lowest since November 26 at $1,743.5/mt on Thursday, before it ended down 0.54% at $1,749/mt. The unwinding of long positions primarily accounted for the loss in LME aluminium. The most traded SHFE 2001 contract lost 0.36% to 13,890 yuan/mt overnight, as longs covered their positions. It is expected to waver between 13,860-13,900 yuan/mt today. Spot premiums are seen at 40-60 yuan/mt over the SHFE 1912 contract.

Zinc: Three-month LME zinc slipped to an intraday low of $2,217.5/mt on Thursday, before it recouped some losses to end down 0.62% at $2,239/mt. LME zinc now resides around the five-day moving average, subdued by the 10-day one but supported by the lower Bollinger band. Zinc stocks across LME warehouses decreased 0.47% on the day. With mixed trade news, investors are likely to remain on edge over China-US tensions recently. Whether LME zinc could cling to the five-day moving average will come under scrutiny today, and the contract is expected to move between $2,210-2,260/mt. The most active SHFE 2001 contract eased 0.25% to 17,935 yuan/mt overnight, holding to the range where it hovered last week. It is expected to trade between 17,800-18,200 yuan/mt today. Spot premiums for domestic 0# Shuangyan are seen lower at 290-340 yuan/mt.

Nickel: Three-month LME nickel rallied from earlier lows to an intraday high of $13,445/mt on Thursday, before it erased some gains to end up 1.07% at $13,280/mt. Whether LME nickel could hold above $13,200/mt will come under scrutiny today. The most traded SHFE 2002 contract climbed to a session-high of 106,940 yuan/mt overnight, before it pared some gains to close up 1.11% at 105,390 yuan/mt. Resistance at the five-day moving average at 106,000 yuan/mt should be closely watched today.

Lead: Three-month LME lead fluctuated to close 0.39% weaker at $1,906/mt on Thursday. With no tangible signs of a rally, investors are likely to remain divided around $1,900/mt in the short term. The most active SHFE 2001 contract recovered from earlier losses to close flat at 15,080 yuan/mt overnight. Bearish investors appeared to be slowing the load-up of positions, and whether SHFE lead could remain above 15,000 yuan/mt will come under scrutiny in the near term.

Tin: Three-month LME tin firmed 0.27% to $16,775/mt on Thursday, remaining above all the near-term moving averages. Immediate resistance is seen at a previous range around $16,800/mt, with next resistance at $17,000/mt. The most traded SHFE 2001 contract hovered below the daily moving average at 139,200 yuan/mt overnight, and ended up 0.24% at 139,020 yuan/mt. Resistance lies at 139,500 yuan/mt, while support lies at 138,000 yuan/mt.

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