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SMM Morning Comments (Dec 30)
Dec 30,2019 09:49CST
price review forecast
LME base metals and the SHFE complex mostly increased last Friday night

SHANGHAI, Dec 30 (SMM) – 

Copper: Prices of copper moderated after climbed last Friday night as a failure to reach an agreement for production cuts by Chinese top copper smelters clouded market sentiment and intensified US-Europe trade tensions lifted risk aversion of investors. Three-month LME copper edged higher to close at $6,226.5/mt while the most-traded SHFE contract ended down 0.62% at 49,380 yuan/mt. The decline in prices was capped as unexpected withdrawal in US crude oil inventories propped up oil prices. With support from the 10-day moving average, the SHFE contract is expected to trade between 49,000-49,500 yuan/mt and LME copper is seen hovering at $6,190-6,250/mt. Spot discounts are likely at 150-100 yuan/mt amid thin year-end trades. 

Aluminium: Lower inventories continued to buoy three-month LME aluminium, which extended a price rally and closed up 0.25% at $1,823.5/mt last Friday night. The most-traded SHFE 2002 contract gained 0.46% on the day and finished at 14,145 yuan/mt on the back of short-covering. But potential smaller declines in social inventories of primary aluminium are expected to keep the contract under downward pressure this week. Trading range is seen at 14,000-14,250 yuan/mt today with LME aluminium trading between $1,800-1,840/mt. 

Zinc: Three-month LME zinc regained losses from the previous two sessions with the 20-day moving average and the Bollinger middle band lending strong support after LME zinc inventories shrank for the 16th consecutive day to hit the lowest level since November 11, standing at 51,600 mt as of Friday. Ending 1.52% higher on the day at $2,310.5/mt, LME zinc is expected to hover between $2,270-2,330/mt today. The most-traded SHFE 2002 contract trimmed some gains after climbed, finishing 0.45% higher at 18,040 yuan/mt. An absence of a significant increase in social inventories of refined zinc may offer some support to prices while environmental production curbs continue to affect downstream purchases. The contract will likely test pressure from the 40-day moving average today, with spot premiums of 0# domestic Shuangyan Zinc at 140-170 yuan/mt. 

Nickel: Three-month LME nickel recovered after slipped to a session low of $14,035/mt, still ending 0.59% lower on the day at $14,235/mt. With support the Bollinger middle band, the most-traded SHFE contract moved higher to close at 111,790 yuan/mt, up 0.4% on the day. Pressure above is seen from the five- to 10- day moving averages with support for LME nickel expected from the 10-day moving average. 

Lead: Three-month LME lead moved along the five-day moving average with signs of halting the previous slide, as it climbed to a high of $1,943/mt and ended up 0.08% at $1,936.5/mt. The most-active SHFE contract also finished higher last Friday night, by 0.07% at 15,230 yuan/mt. But pressure from the 40-day moving average and weakness in fundamentals remain a risk for near-term prices. 

Tin: Three-month LME tin pared some losses after it slipped to a low of $16,930/mt, ending $135/mt lower on the day at $17,100/mt. It is expected to face pressure from the five- to 10- day moving averages, or $17,250/mt in the short term with the most-traded SHFE 2005 contract finding support from 136,500 yuan/mt.

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