Evening Comments (Dec 20): Industrial metals mixed amid revived hard Brexit fear, US-China trade relief

SHANGHAI, Dec 20 (SMM) – Industrial metals on the Shanghai Futures Exchange closed mixed on Friday, as investors weighed thawing in US-China trade tensions against revived fears of a hard Brexit.

Nickel was the best performer with a 2.1% increase, zinc advanced 0.7%, and aluminium inched up 0.1%, while copper dipped 0.02%, lead shed 0.2% and tin fell 0.3%.

The ferrous complex also saw mixed performance. Iron ore dropped 0.9%, hot-rolled coil slid 0.7%, coke and coking coal edged down 0.05% and 0.04%, respectively. Rebar rose 0.3% and stainless steel gained 0.2%.

US GDP data slated for release tonight will provide some fresh cues to the markets. The latest UK GDP data showed that British economic growth was slightly better than first thought in the third quarter but still sluggish.

Official data revealed that UK GDP in the July to September period grew by 0.4% quarter on quarter and by 1.1% year on year.

Copper: The most active SHFE 2002 contract rose swiftly to its highest since April 19 at 49,560 yuan/mt, before it erased those gains to close the day a tad weaker at 49,030 yuan/mt. SHFE copper has fallen below the five-day moving average, with KDJ indicators in a bearish bias, pointing to limited upward momentum in prices. Whether it could hold above 48,900 yuan/mt will come under scrutiny tonight.  

Aluminium: The most traded SHFE 2002 contract eased during the daytime session, paring overnight gains to close 0.14% higher at 14,175 yuan/mt, as longs took profits after the prices climbed to highs in more than three months. Low stocks and tight spot availability are expected to limit downside in SHFE aluminium, which is likely to move between 14,100-14,200 yuan/mt tonight.

Zinc: The most active SHFE 2002 contract climbed to a one-week high of 18,195 yuan/mt in early morning trade, before it eased to end the day 0.67% higher at 18,110 yuan/mt. This marked a second straight day of gains, with KDJ indicators in a golden cross. This, coupled with data showing a draw in zinc social inventories, will likely bolster SHFE zinc prices tonight.  

Nickel: The most traded SHFE 2002 contract rose to a three-week high of 112,560 yuan/mt in early morning trade, before it weakened to finish the trading day 2.12% stronger at 111,740 yuan/mt. Resistance at 112,000 yuan/mt will come under scrutiny tonight.

Lead: Shorts knocked the most active SHFE 2002 contract to an intraday low of 14,950 yuan/mt in afternoon trade, before the contract recovered some ground to end down 0.23% at 14,985 yuan/mt. The lead market now is dictated by shorts, with longs remaining on the sidelines. Whether SHFE lead could return above 15,000 yuan/mt will come under scrutiny tonight.  

Tin: The most traded SHFE 2005 contract relinquished earlier gains to close the trading down 0.27% weaker at 139,520 yuan/mt.