SMM Morning Comments (Dec 11)

SHANGHAI, Dec 11 (SMM) –

Copper: Copper prices saw their gains decelerate overnight as caution returned to the market ahead of a deadline for US tariffs on Chinese goods. Three-month LME copper climbed to its highest since July 19 at $6,100/mt on Tuesday, before closing up 0.17% at $6,092/mt. The most active SHFE 2002 contract gained 0.37% to 48,760 yuan/mt overnight. With investors remaining on edged ahead of the Fed interest rate decision and US tariff deadline, LME copper is likely to move between $6,050-6,100/mt today, with SHFE copper at 48,500-48,800 yuan/mt. Spot trades are seen in a discount of 10 yuan/mt to a premium of 40 yuan/mt.

Aluminium: Three-month LME aluminium erased earlier gains to close down 0.43% at $1,753/mt on Tuesday. The buildup of short positions primarily accounted for the decline. LME aluminium is expected to hover between $1,740-1,780/mt today. The most traded SHFE 2002 contract gained 0.2% to 13,890 yuan/mt overnight, primarily driven by the load-up of long positions. Despite declining costs, robust consumption fuelled market confidence. The market remains sensitive to changes in inventories of primary aluminium and aluminium billets. SHFE aluminium is expected to waver between 13,860-14,000 yuan/mt today, with spot premiums of 30-50 yuan/mt over the SHFE 1912 contract.  

Zinc: Three-month LME zinc on Tuesday reversed earlier gains to a low of $2,213/mt, near three-month lows it plumbed last week, before it recovered some ground to close down 0.6% at $2,224.5/mt. Tuesday’s price decline came despite a draw of 0.6% in LME zinc inventories. LME zinc is expected to move between $2,200-2,250/mt today, with bearishness prevailing across the market. The load-up of short positions took the most active SHFE 2002 contract to a session-low of 17,800 yuan/mt overnight, before the contract recovered to close 0.2% firmer at 17,905 yuan/mt thanks to support at the five- and 10-day moving averages. SHFE zinc is likely to continue to test resistance at the 20-day moving average, with MACD indicators in a golden cross. The SHFE 2002 contract is expected to trade between 17,700-18,100 yuan/mt today. Spot premiums for domestic 0# Shuangyan are seen further lower at 140-180 yuan/mt, as supply is expanding while environmental restrictions are weakening demand from galvanising.

Nickel: Three-month LME nickel slipped to a new five-month low of $12,900/mt on Tuesday, on the back of news that nickel stocks across LME warehouses jumped 14,244 mt on the day to 83,520 mt. This came before LME nickel rallied to finish the trading day 0.71% higher at $13,415/mt. Whether LME nickel could shrug off pressure at the 10-day moving average will come under scrutiny today. The most traded SHFE 2002 contract rose to a one-week high of 108,000 yuan/mt overnight, before it ended up 1.6% at 107,190 yuan/mt. The 10-day moving average at 107,000 yuan/mt should be closely watched today.

Lead: Three-month LME lead rallied on Tuesday, advancing 1% to end at an intraday high of $1,916/mt. Whether LME lead could convincingly stand above the 10-day moving average will come under scrutiny in the near term. The most active SHFE 2002 contract strengthened 0.46% to end at 15,180 yuan/mt overnight. There are no signs of a strong rally for SHFE lead, without substantial gains in the previous sessions.

Tin: Three-month LME tin advanced 1.81% to close at a three-month high of $17,410/mt on Tuesday. Resistance lies at $17,700/mt. The most traded SHFE 2001 contract recovered from earlier losses to end 0.58% stronger at 141,870 yuan/mt overnight. Immediate resistance is seen at 142,000 yuan/mt, with next resistance at 145,000 yuan/mt.