SMM Morning Comments (Jan 8)

SHANGHAI, Jan 8 (SMM) –

Copper: Copper prices recovered from an earlier slip overnight. Three-month LME copper strengthened 0.44% on the day to $6,170/mt, while the most active SHFE 2003 contract weakened 0.23% overnight to end at 48,770 yuan/mt. Copper prices are set to ease today following the latest developments in US-Iran tensions. LME copper is expected to move between $6,100-6,160/mt, with SHFE copper at 48,600-49,000 yuan/mt. Spot premiums are seen at 50-80 yuan/mt amid thin trades.

Aluminium: Three-month LME aluminium pulled back on Tuesday, shedding 0.76% to $1,818/mt. It is expected to trade between $1,800-1,840/mt today. The most traded SHFE 2002 contract slipped to a session-low of 14,025 yuan/mt in early trade overnight, before it recovered some ground to close a tad weaker at 14,070 yuan/mt. SHFE aluminium faces stiff resistance at 14,100 yuan/mt, and is expected to trade between 13,900-14,100 yuan/mt today. Spot premiums are seen at 100-140 yuan/mt.  

Zinc: Three-month LME zinc climbed to its highest since November 18 at $2,366/mt on Tuesday, before it closed the trading day 1.4% higher at $2,352/mt. Zinc stocks across LME warehouses continued to fall, decreasing 0.54% on the day to 50,500 mt. LME zinc now faces resistance at the 60-day moving average and the upper Bollinger band, while falling inventories and the lower US dollar will offer some support. LME zinc is expected to trade between $2,320-2,370/mt today.  The most active SHFE 2003 contract rose to a nearly two-month high of 18,475 yuan/mt in early trade overnight, as longs flocked in. It later hovered to end the session 1.82% higher at 18,420 yuan/mt, sitting above the 60-day moving average. Continued decline in social inventories ahead of the Chinese New Year holiday and firmer spot premiums in Shanghai boosted morale among longs, but a possible easing in tight availability in Shanghai amid deliveries from Tianjin and Guangzhou and the upcoming holiday-closure of downstream consumers are set to limit upside in SHFE zinc. It is expected to move between 18,000-18,500 yuan/mt today. Spot premiums for domestic 0# Shuangyan are seen at 320-350 yuan/mt over the SHFE 2001 contract.

Nickel: Three-month LME nickel advanced 0.72% to end at $13,910/mt on Tuesday. Resistance at $14,000/mt will come under scrutiny today. The most traded SHFE 2003 contract came off from a session-high of 109,750 yuan/mt to close overnight session 0.6% firmer at 108,780 yuan/mt. SHFE nickel now faces pressure at 109,000 yuan/mt where sit the five-day moving average and the middle Bollinger band.

Lead: Three-month LME lead crept up to a nearly one-week high of $1,932/mt on Tuesday, before it gave back all those gains to close the trading day 0.57% lower at $1,908/mt. LME lead remained in the tight range around $1,900/mt. The most active SHFE 2002 contract erased earlier gains to close 0.37% higher at 14,840 yuan/mt overnight. It is likely to resume its downtrend given its weak fundamentals.  

Tin: Three-month LME tin rose to an intraday high of $17,135/mt on Tuesday, before it eased to end the trading day 0.53% higher at $16,965/mt. Resistance is seen at the 20-day moving average at $17,200/mt. The most traded SHFE 2006 contract gained 0.66% in overnight trading to end at 135,660 yuan/mt, as longs added their positions. It was supported by the five-day moving average but pressured by the 10-day one.