LIVE FUTURES REPORT 24/01: SHFE copper prices slide after surge in LME stocks; rest of complex lower

Base metals prices were down across the board during Asian morning trading on Wednesday January 24, with copper leading the losses following a sharp increase in red metal stocks on the London Metal Exchange overnight.

The most-traded March copper contract on the SHFE plunged to 52,730 yuan ($8,237) per tonne as of 10.03am Shanghai time, down by 990 yuan from the previous session’s close.

LME copper inventories increased a net 36,300 tonnes to 248,075 tonnes on Tuesday, hitting their highest since October 20, 2017. 8,100 tonnes were re-warranted, and over 55% of the total on-warrant stock increase was in the South Korean port of Busan.

“Stockpiles at LME warehouses jumped 28%... the most in 10 months to 248,100 tonnes. This came on the back of data released Monday showing China’s refined copper production climbed to an-all time high in 2017, rising 7.7% year on year to 8.89 million tonnes,” ANZ Research said.

“This instigated a sell off across the market,” the bank added.

“A notable inventory increase was seen in Asian LME-sheds, however, Chinese copper importers are not active in buying given the tightened credit situation among banks [ahead of Chinese New Year on February 16],” Citic Futures Research said.

“Copper prices are likely to dip further in the short term,” it added.

Weak demand weighs on zinc prices
  • The SHFE March zinc contract price slipped by 120 yuan to 26,095 yuan per tonne as of 10.03am Shanghai time.
  • Depressed demand as well as ongoing stock pressure have put a cap on zinc prices.
  • “Chinese zinc consumption remains weak, with downstream galvanizing refineries’ operational rates at low levels,” Citic Futures Research noted.
  • “Despite the recent decline in SHFE zinc inventories, stocks are expected to tick higher due to the sluggish demand ahead of the Chinese Lantern Festival [which takes place on March 2],” it added.
  • In addition, zinc stocks at Shanghai-bonded warehouses also remain elevated. Stocks stood at around 155,000-160,000 tonnes at the end of December, the highest level in 2017 and 80% higher than the previous month, according to Metal Bulletin’s assessment.

Other base metals edge lower
  • The SHFE March aluminium contract price edged 20 yuan lower to 14,630 yuan per tonne.
  • The SHFE March lead contract price dipped by 80 yuan to 19,720 yuan per tonne.
  • The SHFE May nickel contract price fell by 590 yuan to 99,130 yuan per tonne
  • The SHFE January tin contract price dropped by 390 yuan to 146,510 yuan per tonne.

Currency moves and data releases

  • The dollar index was up by 0.01% at 90.02 as of 10.03am Shanghai time.
  • In other commodities, the Brent crude oil spot price was down 0.08% to $69.73 per barrel as of 10.03 am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.15% to 3541.11 as of 10.40 am Shanghai time. In data on Tuesday, the US Richmond Fed Manufacturing Index for January disappointed with a reading of 14 – below an expected and previous print of 19 and 20 respectively. Meanwhile, the EU consumer confidence was on in line with expectations at 1.
  • Today, there is a host of flash manufacturing and services purchasing managers’ indices out across Europe and the United States, the UK has its average earnings index, claimant count and unemployment rate while other US data includes house prices, existing home sales and crude oil inventories.

LME snapshot at 02.03am London time
Latest three-month LME Prices
  Price ($ per tonne)  Change since yesterday's close ($)
Copper 6,944 21
Aluminium 2,224 -5.5
Lead 2,616 8
Zinc 3,414 2
Tin 20,730 20
Nickel 12,830 -20
SHFE snapshot at 10.03am Shanghai time
Most-traded SHFE contracts
  Price (yuan per tonne)  Change since yesterday's close (yuan)
Copper  52,730 -990
Aluminium 14,630 -20
Zinc 26,095 -120
Lead 19,720 -80
Tin  146,510 -390
Nickel  99,130 -590

Changjiang spot snapshot on January 24
  Range (yuan per tonne)  Change (yuan)
Copper  52,590 —52,610 -900
Aluminium 14,410 — 14,450 50
Zinc 26,090 —26,890 -30
Lead 19,600 —19,800 200
Tin  145,000—146,500 0
Nickel  98,300 —98,800 750

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