LIVE FUTURES REPORT 09/10: SHFE base metals mostly higher; copper strengthens on supply-side concerns

Base metals prices on the Shanghai Futures Exchange (SHFE) were broadly higher during Asian morning trading on Monday October 9, with copper prices drawing support from concerns of supply tightness.

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The most-active November copper contract on the SHFE traded at 52,130 yuan ($7,830) per tonne as of 03:40 BST, up 290 yuan compared with the close on September 29.

Concerns of tight supply ahead of a traditional peak demand season for copper has lent support to red metal prices this morning.

“In the physical market, the supply of red metal was tight before [China’s] week-long National Day Golden week holiday (October 1-7) as [copper] stocks on the SHFE continuously declined, with over 100,000 tonnes coming out of SHFE-approved warehouses in September. In the meantime, inventories in the [Shanghai] bonded area have also been decreasing,” an analyst with China’s Galaxy Futures said.

Deliverable copper stocks on the SHFE fell for a sixth consecutive week on September 29 with inventories declining 38,167 tonnes to 103,151 tonnes.

More recently, stocks on the London Metal Exchange declined a net 2,625 tonnes to 293,460 tonnes, with 1,750 tonnes freshly cancelled on Friday.

“October is a peak season for copper demand and downstream consumers will begin a new round of restocking after returning from the holiday, which should further support copper prices going forward,” the Galaxy Futures analyst added.

“The risk-off tone that impacted investor appetite late on Friday is unlikely to spill over into this week. With fundamentals remaining constructive, commodities should start the week with a positive bias,” ANZ Research said on Monday.

The global refined copper market recorded a deficit of 70,000 tonnes in June, pushing the supply/demand balance to a deficit of 75,500 tonnes between January and June 2017, the International Copper Study Group estimates.

Nickel leads the complex higher; tin bucks trend

  • The SHFE’s January nickel contract was the outperformer this morning, rallying by 2.3% or 1,950 yuan to 86,750 yuan per tonne, compared with its closing price on September 29.
  • The SHFE November zinc contract surged 1.8% or 470 yuan to 26,540 yuan.
  • The SHFE December aluminium contract rose 155 yuan to 16,600 yuan.
  • The SHFE January tin price edged lower 790 yuan to 147,630 yuan per tonne.
  • The SHFE November lead contract declined 120 yuan to 21,100 yuan.

Currency moves and data releases
  • The dollar index was down 0.04% to 93.74 so far today.
  • In other commodities, the Brent crude oil spot price was up 0.36% to $55.70 per barrel, and the Texas light sweet crude oil spot price increased 0.43% to $49.36.
  • In equities, the Shanghai Composite was up 1.17% to 3,388.
  • In data today, China released its Caixin Composite Output Index this morning, which covers manufacturing and services companies. The index fell to 51.4 in September from 52.4 in August, marking a three-month low. Meanwhile, China’s Caixin General Services Business Activity Index declined to 50.6 last month from 52.7 in August, the worst reading since December 2015.
  • The economic agenda is light today with German industrial production and EU Sentix investor confidence due.

LME snapshot at 0341 London time
Latest 3M  LME Prices
  Price ($/t)  Change since Friday's close ($)
Copper 6,673 6.5
Aluminium 2,154.50 1.5
Lead 2,520.50 -12.5
Zinc 3,252 17
Tin 20,740 190
Nickel 10,735 135
SHFE snapshot at 0340 London time
Most traded SHFE contracts
  Price (yuan/t)  Change since Friday's close (yuan)
Copper  52,130 290
Aluminium 16,600 155
Zinc 26,540 470
Lead 21,100 -120
Tin  147,630 790
Nickel  86,750 1,950

Changjiang spot snapshot on October 9
  Range (yuan/t)  Change (yuan)
Copper  52,490—52,510 1,020
Aluminium 16,180—16,220 50
Zinc 27,200—28,000 800
Lead 21,800—22,000 300
Tin  144,500—146,500 1,000
Nickel  87,000—88,000 1,800

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