SMM Morning Comments (Dec 28)

SHANGHAI, Dec 28 (SMM) –

Copper: LME copper pared some earlier losses to close 0.2% higher at $5,972/mt on Thursday. After a lower open, the SHFE 1902 contract inched down to close at 49,040 yuan/mt overnight. An overnight decline in US crude oil prices and a drop in China’s November industrial profits weighed on copper prices, which are likely to weaken today. LME copper is expected to trade at $5,940-6,000 yuan/mt today with the SHFE 1902 contract at 47,800-48,200 yuan/mt. Spot premiums are seen at 10-80 yuan/mt.

Aluminium: The SHFE 1902 contract fell to close at 13,565 yuan/mt overnight. Recent declines in alumina prices and a rebound in social stocks affirmed our expectations that aluminium prices would fall into the medium term. The contract is expected to trade at 13,520-13,650 yuan/mt today with spot discounts at 120-80 yuan/mt. LME aluminium extended its losses on Thursday as the removal of US sanctions on Rusal took a toll. It is expected to trade at $1,840-1,880/mt today.

Zinc: Despite a higher open, LME zinc fell to the week’s lows of $2,468/mt on Thursday. It closed some 0.2% higher at $2,491/mt. LME zinc sperformed poorly on the first day after the Christmas break and encountered strong resistance at $2,500/mt. It is expected to remain weak today with a trading range of $2,470-2,515/mt. The SHFE 1902 contract initially fell to 20,600 yuan/mt overnight before it recovered those losses to close at 20,700 yuan/mt. Slack supply and demand by year-end as well as limited growth in inventories are expected to keep SHFE zinc rangebound today with a trading range of 20,550-21,000 yuan/mt.

Nickel: LME nickel touched a 13-month low of $10,700/mt on Thursday and finished the trading day 1.4% lower at $10,720/mt. The SHFE 1905 contract hovered in a 400 yuan/mt range overnight and ended at 88,100 yuan/mt. Shorts aggressively loaded up their bets earlier in the week and might take profits today, also the last trading day of 2018. LME nickel is expected to hover around $10,800/mt today with the SHFE 1905 contract at 87,500-89,000 yuan/mt. Spot prices are seen at 88,700-91,000 yuan/mt.

Lead: LME lead surged past the $2,000/mt level on Thursday and closed the day 2.4% higher at $2,035.5/mt. This is likely to grow risk sentiment among investors. With a strong LME lead, the SHFE 1902 contract climbed overnight. With resistance at the 20-day moving average, the contract closed slightly higher at 18,010 yuan/mt.

Tin: LME tin moved above moving averages and ended 0.6% higher at $19,420/mt on Thursday. Losses in the US dollar provided some support to LME tin. It is expected to remain rangebound in the near term with resistance at $19,500/mt. The SHFE 1905 contract hovered around 144,700 yuan/mt and closed at 144,880 yuan/mt overnight. It continued to trade at lows as sluggish consumption across spot markets hampered sentiment across futures markets. The contract is expected to remain under pressure today with resistance at 145,700 yuan/mt.