LIVE FUTURES REPORT 06/11: SHFE copper, zinc prices edge lower on rising stocks

Copper prices on Shanghai Futures Exchange edged lower during Asian morning trading on Monday November 6, due to concerns over rising domestic stocks and the upcoming low-consumption season.

The most-traded January copper contract on the SHFE stood at 54,350 yuan per tonne as of 10:15am Shanghai time, down 40 yuan from the previous session’s close.

Deliverable copper stocks at SHFE-approved warehouses increased by 18% or 19,381 tonnes week on week to 127,273 tonnes as of November 3.

A positive arbitrage, better-than-expected domestic demand and strong domestic physical premiums all encouraged imports into China during October, with some material coming from the bonded area, while the majority came from ocean cargoes.

Metal Bulletin assessed Shanghai bonded copper stocks at 480,000-490,000 tonnes at the end of October, down 5,000 tonnes from late September, which was an eight-month low.

In addition to rising stocks, expectations of decreased demand for the red metal ahead of the upcoming winter season in China are also weighing on prices.

Traditionally, September and October are peak consumption seasons in the country, while usage declines during China’s winter months (November to March).

Meanwhile, the dollar remains in high ground and continues to put downward pressure on copper prices.

The dollar index was up by 0.01% at 94.94 as of 12:34pm Shanghai time, compared with a reading of 94.69 at roughly the same time on Friday.

Zinc stocks jump; prices under pressure
  • The most-traded January zinc contract slipped 100 yuan to 25,835 yuan per tonne.
  • Zinc stocks in SHFE-approved sheds increased 14,960 tonnes, or 20.9%, over the past week to 86,518 tonnes as of November 3.
  • In contrast, Metal Bulletin assessed Shanghai-bonded zinc stocks at around 55,000-60,000 tonnes at the end of October, down 34.3% from the previous month and 65.8% from last year. Inventories are now at the lowest since April 2015 when Metal Bulletin began its assessments.
  • Metal Bulletin assessed cif Shanghai zinc premiums at $155-165 on October 31, down $5 per tonne week on week, reflecting the narrowed arbitrage window.

Base metals prices
  • The SHFE December lead contract rose 85 yuan to 18,675 yuan per tonne.
  • The SHFE January aluminum contract fell 115 yuan to 16,125 yuan per tonne.
  • The SHFE January nickel contract rose 1,350 yuan to 102,670 yuan per tonne.
  • Lingering optimism surrounding nickel’s prospects in the electric vehicle sector continue to boost prices.
  • The SHFE January zinc contract dipped 100 yuan to 25,835 yuan per tonne.
  • The SHFE January tin contract rose 130 yuan to 144,050 yuan per tonne.

Currency moves and data releases

  • The dollar index was up by 0.01% at 94.94 as of 12:34pm Shanghai time, compared with a reading of 94.69 at roughly the same time on Friday.
  • In other commodities, the Brent crude oil spot price up $0.18 at to $62.25 per barrel and the Texas light sweet crude oil spot price up $0.17 at $55.79 per barrel.
  • In equities, the Shanghai Composite index down 0.29% to 3361.99.
  • In US data on Friday, the final services purchasing managers’ index (PMI) for October was down at 55.3 from 55.9. US average hourly earnings were at 0.0%, against a forecast of 0.2% and down from 0.5% last month, and the unemployment rate was at 4.1%, down from 4.2% previously. US non-farm employment rose 261,000 in October, the largest increase since July 2016 but was below the expected 312,000 gain. The ISM non-manufacturing PMI surprised to the upside with a print of 60.1, above expectations for a reading of 58.5.
  • On the economic agenda today, there is services PMI data out across Europe and the European Union’s Sentix investor confidence and monthly producer price index.
  • In addition, US Federal Open Market Committee member William Dudley is speaking.

LME snapshot at 0315 London time
Latest 3M  LME Prices
  Price ($/t)  Change since Friday's close ($)
Copper

6,922

41

Aluminium

2,175

-10.5

Lead

2,468

0

Zinc

3,222.5

5

Tin

-

-

Nickel

12,830

120


SHFE snapshot at 0315 Shanghai time
Most-traded SHFE contracts
  Price (yuan/t)  Change since Friday's close (yuan)

Copper 

54,350

-40

Aluminium

16,125

-115

Zinc

25,835

-100

Lead

18,675

85

Tin 

144,050

130

Nickel 

102,670

1,350


Changjiang spot snapshot on November 6
  Range (yuan/t)  Change (yuan)
Copper  54,460—54,500 140
Aluminium 15,980—16,020 80
Zinc 26,260—26,310 -30
Lead 18,600—18,800 -50
Tin  143,000—144,500 0
Nickel  101,700—101,800 600

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