LIVE FUTURES REPORT 23/10: SHFE aluminium consolidates recent gains; lead lower on stock inflow

The most-traded December aluminium contract on the SHFE stood at 16,320 yuan ($2,459) per tonne as of 03:43 BST, down 5 yuan from Friday’s close, with around 227,000 lots of the contract having changed hands so far.

Metal Bulletin’s analyst, James Moore, noted that although supply-side reforms in China continue to support the underlying fundamentals as authorities have enforced outdated capacity closures, China continues to add new low-cost capacity and rising prices have encouraged smelters to restart previously shuttered capacity.

“Metal Bulletin Research currently predicts China's aluminium production will increase by almost 10% in 2017 to 34.8 million tonnes,” Moore said.

Meanwhile, an increase in deliverable lead stocks into SHFE-approved warehouses last week has put downward pressure on the metal’s prices this morning. SHFE lead stocks increased by 3,549 tonnes or 18.4% to 22,863 tonnes in the week ended October 20.

The most-traded December lead contract was at 19,210 yuan, down 60 yuan from Friday’s close. Around 88,098 lots of the contract have been traded over the exchange.

However, analysts expect that the pullback in lead prices will be short-lived, given strong fundamentals supporting the metal’s demand.

Sluggish output growth among crucial producers and accelerating demand from major and second-tier consumer countries is expected to push the global lead market into a deficit this year. Consumption is expected to outpace production by 45,000 tonnes in 2017 and by as much as 55,000 tonnes in 2021 as the market continues to tighten, BMI Research forecast.

Copper slides

• The SHFE’s most-traded December copper contract fell 460 yuan to 54,640 yuan per tonne.
• Diversified-miner Vale increased its copper production 6.6% year on year in the third quarter of 2017, boosted by record output at its Brazilian Salobo mine.
• Total finished production came to 118,800 tonnes in the three months ended September 30, from 111,400 tonnes in the corresponding quarter of 2016, Vale said on Thursday October 19.

Rest of complex lower

• The SHFE December zinc contract price slid 50 yuan to 25,455 yuan per tonne.
• The SHFE January nickel contract price dropped 2,620 yuan to 95,030 yuan per tonne.
• The SHFE January tin contract price edged down 500 yuan to 144,100 yuan per tonne.

Currency moves and data releases

• The dollar index, which measures the dollar against a basket of six major currencies, was up 0.2% at 93.83, its highest since October 6, 2017. The primary support for the dollar came from higher US yields, with the two-year yield hitting a nine-year high as the progress in tax reforms boosted expectations of increased borrowing from the US government and a likely pickup in inflation.
• In other commodities, December Brent crude futures climbed 0.28% to $57.91 per barrel as the Organization of the Petroleum Exporting Countries and its allies reiterated that all options are open to re-balance oil markets.
• Staying with the USA, oil drillers reduced the rig count a third week to the lowest since June, according to official figures released by Baker Hughes.
• In equities, the benchmark Shanghai Composite Index rose 0.11%, or 3.63 points, to 3,382.28 and the Shenzhen Composite Index, which tracks stocks on China's second exchange, edged down 0.02%, or 0.39 points, to 1,999.29.
• In data on Friday, German PPI came in at 0.3% for September, up from 0.2% the previous month and the EU current account recorded a surplus of €33.3 billion, up from €25.1 billion previously. In US data, existing home sales were up in September at 5.39 million, compared with 5.35 million previously.
• The economic agenda is light today with the German Bundesbank monthly report, UK CBI industrial order expectations and EU consumer confidence of note.

LME snapshot at 0343 London time
Latest 3M  LME Prices
	Price ($/t)	Change since Friday's close ($)
Copper	6,971.00	19
Aluminium	2,147.00	11
Lead	2,482.00	14.5
Zinc	3,117.00	18
Tin	19,600	25
Nickel	11,770	35

SHFE snapshot at 1043 Shanghai time
Most traded SHFE contracts
	Price (yuan/t)	Change since Friday's close (yuan)
Copper	54,640	460
Aluminium	16,320	5
Zinc	25,420	50
Lead	19,210	60
Tin	144,100	500
Nickel	95,030	2,620

Changjiang spot snapshot on October 23
	Range (yuan/t)	Change (yuan)
Copper	55,000-55,040	70
Aluminium	16,120-16,160	30
Zinc	26,030-26,080	60
Lead	19,600-19,800	0
Tin	142,500-144,500	-250
Nickel	94,850-95,050	-350