Evening Comments: Copper rallied on trade deal, better-than-expected Chinese data

SHANGHAI, Dec 16 (SMM) – Shanghai copper prices recovered from earlier losses on Monday as data showed that China’s industrial output and retail sales rose more than expected in November.

Prices were also supported by lingering market euphoria over a “phase one” trade deal reached between the US and China and a resounding Conservative win in UK election that paves the way for Britain to leave the EU by the end of next month.

SHFE copper added 0.1% on the day, as most nonferrous metals closed higher. Nickel climbed 0.7%, tin gained 0.5% and aluminium inched up 0.07%, while zinc fell 0.2% and lead dropped 1.1%.

Lead prices bucked the uptrend, suspending its recent moderate rally as investors turned their focus back to the fundamentals, with a slight widening in the price spreads between primary and secondary lead and a dip in prices of battery scrap growing bearishness across the market.

As of December 13, lead stocks in SHFE warehouses increased 24.21% from a week earlier to 45,926 mt, the highest since August 11, 2017, showed data from the bourse. LME lead stocks stood at 67,325 mt, meanwhile, lows in about four months and a half.

The ferrous complex, except for stainless steel and coking coal, drifted lower. Rebar dropped 1.3%, coke shed 1%, hot-rolled coil declined 0.9% and iron ore slipped 0.8%.

Factory activity data out of the eurozone and US are slated for release tonight.

Copper: The most active SHFE 2002 contract rebounded from an earlier low of 48,760 yuan/mt to close 0.12% higher at 49,100 yuan/mt. The SHFE 1912 contract ended its trading at a settlement price of 48,620 yuan/mt and saw 14,575 mt delivered.

Aluminium: The most traded SHFE 2002 contract recovered from an intraday low of 13,875 yuan/mt to close marginally higher at 13,915 yuan/mt, as a decline in aluminium inventories over the weekend pointed to continued robustness in consumption. Forthcoming blizzards in the north are expected to slow deliveries to social warehouses and extend the decline in inventories, offering support to prices.  

Zinc: The most active SHFE 2202 contract slipped to an intraday low of 17,930 yuan/mt in morning trade, before it recovered some ground to close 0.17% weaker at 18,025 yuan/mt. Support at 18,000 yuan/mt will come under scrutiny tonight. The SHFE 1912 contract settled its last trading day at 18,365 yuan/mt, with 2,425 mt delivered.

Nickel: The most traded SHFE 2002 contract slid below 110,000 yuan/mt in morning trade, before it recovered to close up 0.74% on the day at 110,720 yunan/mt. Gains in SHFE nickel were capped by pressure at 112,000 yuan/mt. The SHFE 1912 contract settled its last trading day at 111,260 yuan/mt, with 1,968 mt delivered.

Lead: The most active SHFE 2002 contract slipped to its lowest in more than a week at 14,930 yuan/mt, before it finished the trading day 1.12% lower at 14,975 yuan/mt. SHFE lead has given back the majority of gains from the recent rally, back to record lows plumbed at the start of the month. The SHFE 1912 contract settled at 15,270 yuan/mt, with 10,900 mt delivered.  

Tin: The most traded SHFE 2005 contract recovered from earlier losses to close at an intraday high of 139,170 yuan/mt, up 0.52% on the day.