LIVE FUTURES REPORT 14/09: SHFE copper prices dragged lower by further stock deliveries, disappointing China data

The SHFE’s most-active November copper contract traded at 50,630 yuan ($7,747) per tonne as of 03:20 BST, down 370 yuan from the previous day’s close.

The red metal has continued to weaken this morning, succumbing to pressure from further stock deliveries into LME-listed warehouses. Copper inventories on the LME rose for a second consecutive day on Wednesday, up 12.7% or a net 27,850 tonnes to 246,575 tonnes. This followed an increase of 10,300 or 4.9% on Tuesday.

“[Copper] stockpiles are now up 18% this week to 246,575 tonnes. With investor positioning sitting at record high net long position on the LME in recent days. This was enough to induce some investors to lock in their recent gains,” ANZ Research noted.

Red metal prices were under additional pressure following the release of disappointing Chinese economic data on Thursday, which showed that the world’s second-largest economy had continued to cool last month, stoking fears that momentum in the country’s economic growth could be starting to decelerate.

In Chinese data released today, industrial production for August disappointed with a 6.0% rise from a year earlier, compared with an expected 6.6% rise and July’s reading of 6.4%. Retail sales also missed expectations, expanding 10.1% year on year last month, against a projected reading of 10.5% and previous reading of 10.4% in July.

China’s fixed asset investment for the year to August also surprised to the downside, logging a 7.8% rise against an expected and previous increase of 8.2% and 8.3%, respectively.

Growth of private investment similarly slowed, coming in at 6.4% for the January-August period, from 6.9% in the first seven months of the year, suggesting small- and medium-sized private firms still face difficulties in accessing financing.

Stock increases weigh on copper prices

• Nearly 45,000 tonnes of copper cathodes have been delivered into LME sheds over the past two days.
• “It seems as if metals prices begin falling virtually the moment they lose the support of speculative financial investors,” Commerzbank said in a note. “This shows that prices have become detached from the fundamental data and that the price rise was exaggerated.”
• “Moreover, the copper charts look increasingly negative as the uptrend has now clearly broken down and will likely invite yet more fund liquidation,” Edward Meir of INTL FCStone said.

Rest of complex on divergent paths

• The SHFE’s January nickel contract tumbled 1,670 yuan or 1.8% to 90,700 yuan per tonne.
• The SHFE November aluminium contract edged down 15 yuan to 16,545 yuan tonne.
• The SHFE October lead contract rallied 480 yuan or 2.46% to 19,995 yuan per tonne.
• The SHFE January tin price surged 520 yuan to 145,670 yuan per tonne.
• The SHFE November zinc contract was little changed, inching up just 10 yuan to 24,835 yuan per tonne.
• On Wednesday, a further 14,725 tonnes of zinc stocks were delivered to LME sheds, adding to the 13,700 tonnes on Tuesday – all volumes were delivered into Antwerp.

Currency moves and data releases

• The dollar was up 0.1% at 92.45 as of 04:32 BST.
• In other commodities, the Brent crude oil spot price was down 0.08% to $54.99 per barrel, and the Texas light sweet crude oil spot price decreased 0.12% to $49.20.
• In equities, the Shanghai Composite was down 0.19% to 3,377.77.
• In data on Wednesday, the EU employment change was 0.4% for the second quarter of 2017. Industrial production at 0.1% was up from -0.6% last month.
• US PPI and core PPI in August came in at 0.2% and 0.1%, respectively.
• The economic agenda is busy today with an update on UK monetary policy and US data that includes CPI figures for August as well as weekly unemployment claims of note.