SMM Morning Comments (Dec 7)

SHANGHAI, Dec 7 (SMM) –

Copper: LME copper slid to a low of $6,080/mt on Thursday as shorts added their positions after the contract climbed to a high of $6,120.5/mt. LME copper later rebounded to end at $6,134.5/mt. After opening in the red, the SHFE 1902 contract fluctuated overnight and closed at 48,950 yuan/mt. As both LME and SHFE copper have fallen below all short-term moving averages, copper prices are expected to remain weak and trade rangebound at lows today. LME copper is likely to trade at $6,080-6,120/mt today with the SHFE 1902 contract at 48,600-49,000 yuan/mt. Spot premiums are seen at 120-320 yuan/mt.

Aluminium: As Huawei CFO arrest in Canada hampered market sentiment, the SHFE 1901 contract posted a lower open overnight and lost over 100 yuan/mt in five minutes as shorts added more than 1,000 lots shortly after the opening bell. It then traded rangebound to finish overnight session at 13,545 yuan/mt, posting a three-day losing streak. We expect it to weaken in a range of 13,450-13,600 yuan/mt today with spot discounts at 50-10 yuan/mt. After a negative open, LME aluminium extended its decline on Thursday and closed at $1,941/mt. This forced it to relinquish most gains it had made since last Friday. We expect it to remain weak today with a trading range of $1,920-1,960/mt.

Zinc: LME zinc recovered some earlier losses on Thursday and closed at $2,610/mt. With positive fundamentals, LME zinc held some strength even as it struggles to stand firmly above the $2,600/mt level. It is expected to trade at $2,575-2,625/mt today. Despite a negative open, the SHFE 1902 contract climbed into the black overnight and ended at 21,075 yuan/mt as longs added their bets. While support from low inventories sustains, weakening consumption by year-end could limit upside room for SHFE zinc prices. The contract is expected to trade at 20,700-21,200 yuan/mt today.

Nickel: LME nickel slumped on Thursday and ended at $10,860/mt. After opening lower, the SHFE 1901 contract fell to 88,640 yuan/mt overnight as shorts added and longs cut their bets. It clawed back some losses in later trades and closed at 89,010 yuan/mt. With worries over an escalation in the US-China trade tensions on Huawei CFO arrest, We expect LME nickel to weaken when hovering around $10,900/mt today and the SHFE 1901 contract to trade at 88,500-90,000 yuan/mt. Spot prices are seen at 88,500-98,000 yuan/mt.

Lead: As the US dollar retreated from highs, LME lead climbed to close at $1,994/mt on Thursday. It sank to a low of $1,959.5/mt during European trades. LME lead continued to move along with the five-day moving average with resistance lingering at $2,000/mt. Earlier losses in LME lead sent its SHFE counterpart to open in the red overnight. The SHFE 1901 contract recovered some losses during overnight trades and closed at 18,500 yuan/mt. The contract has traded rangebound at highs for four consecutive days, suggesting the divergence in shorts and longs’ idea of the direction.

Tin: LME tin fell on Thursday and ended at $18,915/mt, with support at $18,700/mt. It is expected to trade under pressure in the near term as Huawei CFO arrest in Canada grows concerns over the US-China trade disputes. With several moving averages above, the SHFE 1901 contract traded rangebound at lows overnight and closed at 144,320 yuan/mt. It is expected to remain subdued in the short run with support at 142,500 yuan/mt.