SMM Morning Comments (Jan 15)

SHANGHAI, Jan 15 (SMM) –

Copper: Copper prices extended their gains overnight. Three-month LME copper hit a fresh eight-month peak of $6,321/mt before it closed the trading day 0.3% firmer at $6,310.5/mt. The most active SHFE 2003 contract rose to a two-week high of 49,610 yuan/mt in overnight trading, and closed 0.45% higher at 49,400 yuan/mt. Optimism over the signing of a preliminary US-China trade deal, easing US-Iran tensions, upbeat Chinese trade data and a weaker US dollar will underpin copper prices today. LME copper is expected to move between $6,265-6,325/mt today, with SHFE copper at 49,100-49,600 yuan/mt. Spot premiums are seen lower at 20-50 yuan/mt, as trades weaken ahead of the Chinese New Year holiday.

Aluminium: Three-month LME aluminium rebounded on Tuesday, gaining 0.56% on the day to end at $1,808/mt. LME aluminium wavered in a wide range in recent sessions, and is expected to trade between $1,790-1,815/mt today. The most traded SHFE 2003 contract recovered from earlier losses to end overnight session a tad higher at 13,955 yuan/mt. SHFE aluminium has fallen below 14,000 yuan/mt, but further downside will be limited by low inventories. It is likely to move at 13,900-14,100 yuan/mt today. Spot discounts are seen at 240-180 yuan/mt over the SHFE 2001 contract which is about to expire.

Zinc: Three-month LME zinc recovered from an earlier slip to end the trading day marginally lower at $2,375/mt. Zinc inventories across LME warehouses increased 2.36% on the day to 51,800 mt, as a wider premium for LME cash zinc over the three-month contract, at $11.75/mt on Tuesday, attracted deliveries to the warehouses. LME zinc is expected to trade between $2,340-2,390/mt today. The most active SHFE 2003 contract recouped some earlier losses to end overnight session 0.11% lower at 18,175 yuan/mt. It was supported by the 10-day moving average, while pressured by the 60-day one. It is expected to trade at 17,900-18,400 yuan/mt. Spot premiums for domestic 0# Shuangyan are seen lower at 100-120 yuan/mt over the SHFE 2001 contract, as downstream buyers hold back from making purchases. Deliveries to Shanghai, meanwhile, were slowed by logistical issues.

Nickel: Three-month LME nickel dropped to its weakest in more than a week at $13,645/mt on Tuesday, before it recovered some ground to end the trading day 1.52% weaker at $13,890/mt. LME nickel now faces a resistance confluence of several moving averages, and whether it could cling to the $13,900/mt level will come under scrutiny today. The most traded SHFE 2003 contract shed 1.61% in overnight trading to close at 109,470 yuan/mt. SHFE nickel has fallen below several moving averages and the middle Bollinger band, while support is seen at 108,000 yuan/mt. Resistance at 110,000 yuan/mt and moving averages should be closely watched today.

Lead: Three-month LME lead rallied to a one-month high of $1,955/mt on Tuesday, before it finished the trading day 1.96% higher at $1,951/mt. This indicated that support was strong at $1,900/mt. The most active SHFE 2003 contract tracked gains in its LME counterpart to a session-high of 14,980 yuan/mt overnight, before it ended 0.67% higher at 14,960 yuan/mt. SHFE lead remained in its recent range and is expected to continue such a patter in the short run as longs are not keen to buy.

Tin: Three-month LME tin recovered from earlier losses to end Tuesday 0.2% firmer at $17,435/mt. Resistance is seen at $17,500/mt, while support is at the 20-day moving average at $17,200/mt. The most traded SHFE 2006 contract recovered from an earlier slip overnight, gaining 0.43% to end at 138,820 yuan/mt. Support is seen at 137,500 yuan/mt in the short term, while resistance is at 139,500 yuan/mt.