SMM Morning Comments (Dec 16)

SHANGHAI, Dec 16 (SMM) – 

Copper: Market sentiment was boosted following news that the US and China had reached an agreement on a phase one trade deal, but some investors remained cautious amid the absence of concrete detail. This, together with disappointing retail sales data from the US and higher gold prices, weighed on prices of copper. The most-traded SHFE contract retreated last Friday night and broken support from the five-day moving average, after consecutive increases in the previous sessions. The pullback is expected to continue today, with trading range of the SHFE contract at 48,600-48,900 yuan/mt and three-month LME copper at $6,100-6,150/mt. 

Aluminium: Three-month LME aluminium trimmed gains after climbed to a high of $1,782/mt, ending down 0.4% on the day at $1,764.5/mt, amid volatile macroeconomic development. The most-traded SHFE 2002 contract followed the movement of LME aluminium and closed lower at 13,895 yuan/mt. The strength of downstream consumption will be closely monitored on the fundamental front. Today, the contract is seen trading between 13800-14000 yuan/mt with LME between $1,740-1,800/mt. 

Zinc: News of an US-China trade deal lifted sentiments, sending three-month LME zinc to a high of $2,310.5/mt, but heavy pressure from the 20-day moving average depressed it from highs and ended it 0.13% lower on the day at $2,257/mt. Zinc inventories across LME-listed warehouses shrank 1.1%. The most-active SHFE 2002 contract also finished lower on the day at 18,045 yuan/mt down 0.3%, after it climbed to a high of 18,225 yuan/mt amid trade optimism. Bearish prospects for spot trades at end December, however, will likely keep prices under pressure between 17,900-18,300 yuan/mt today. LME is likely at $2,230-2,280/mt today. 

Nickel: Three-month LME nickel extended its price rally and climbed above the 20-day moving average, closing higher for the fourth straight day by 1.46% last Friday night, at $14,215/mt. The most-traded SHFE contract shrugged off resistance from 112,000 yuan/mt to hit a high of 112,090 yuan/mt. With support from the 20-day moving average and 110,000 yuan/mt, it finished 1.29% higher on the day at 111,300 yuan/mt. The contract may continue to test pressure from 112,000 yuan/mt today, with LME nickel testing pressure from the Bollinger middle band, or $14,300/mt. 

Lead: Three-month LME lead came off from a high of $1,960/mt during the European trading house last Friday after officials from China and the US announced the tariff rollback deal. It slipped to a low of $1,902.5/mt and ended 1.09% on the day at $1,907/mt. The most-liquid SHFE 2001 contract tracked its LME counterpart lower and finished at 15,155 yuan/mt, 0.66% lower on the day. Weak fundamentals and higher social inventories may put near-term prices at risk. 

Tin: Three-month LME tin recovered after slipped to an intraday low of $1,7085/mt, but still finished lower for a third consecutive day, at $17,195/mt. LME tin inventories shrank 25 mt to stand at 6,435 mt. The most-traded SHFE 2001 contract regained losses from the two previous sessions as it rebounded from a low of 139,500 yuan/mt and closed 450 yuan/mt higher on the day at 140,250 yuan/mt. It is expected to face pressure from 140,800 yuan/mt with support from 139,500 yuan/mt today. LME tin will trade with support from $17,000/mt.