LIVE FUTURES REPORT 26/01: SHFE base metals broadly lower amid profit-taking; tin prices buoyed by low stocks

Base metals prices on the Shanghai Futures Exchange were mostly lower during Asian morning trading on Friday January 26 after profit-taking emerged following a strong performance across the complex on Thursday.

The most-traded March copper contract on the SHFE stood at 53,440 yuan ($8,441) per tonne as of 9.53am Shanghai time, down by 400 yuan from the previous session’s close.

The SHFE’s March copper contract had rallied 2.1% to end the day at 53,840 yuan per tonne on Thursday, with mainly weakness in the dollar supporting.

But another large delivery of copper stocks into London Metal Exchange warehouses yesterday has offset bullish over the weakened US currency and prompted investors to take profits.

A further 24,825 tonnes of copper was delivered into LME warehouses on Thursday, the majority in Singapore, which takes the total amount of stock delivered in over the past three days to over 90,000 tonnes.

Inventories increased a net 22,925 tonnes to 299,600 tonnes, up 58.9% since the start of the week and now sitting at their highest since October 2016.

Further clouding copper’s outlook were concerns of weakened demand in China.

“Chinese refined copper cathode imports fell by 10% in 2017, while copper concentrates imports rose by 2%, which signals strong supply and weak demand for copper in the Chinese market,” Citic Futures Reseach noted on Friday.

China imported a total of 17.35 million tonnes of copper concentrates in 2017, marking a year-on-year increase of 2.3%. Meanwhile, imports of refined copper cathode declined by 10.4% to 2.9 million tonnes in the same comparison.

Tin prices buoyed by low stocks
  • Tin was the lone SHFE base metal in positive territory this morning.
  • The SHFE May tin contract price increased by 760 yuan to 147,650 yuan per tonne as of 9.53am Shanghai time.
  • Record low stocks and restocking demand ahead of Chinese New Year holiday (mid-February) have kept tin prices well supported.
  • Total LME tin stocks were at 1,780 tonnes as of Wednesday January 24 – their lowest since the 1980s – after a series of cancelations and deliveries out since January 10.
  • “Tin concentrates exports may rise after the rainy season [in Myanmar], however, high-grade ores are still limited in the market,” Citic Futures Research said, adding “the market anticipates further declines in Chinese tin concentrates imports due to the deadlock in annual tin concentrates TC/RCs [treatment and refining charges] negotiations.”
  • China imported a total of 295,421 tonnes of tin concentrates in 2017, down by 37.75% from 2016, while refined tin imports fell 64.2% to 3,390 tonnes.
  • “Tin doesn’t have a distinctive seasonal demand, but consumers do have restocking demand for production during Chinese New Year holiday,” according to Citic Futures Research.

Rest of metals lower
  • The SHFE March aluminium contract price was down by 40 yuan to 14,750 yuan per tonne.
  • The SHFE March lead contract price dropped by 200 yuan to 19,450 yuan per tonne.
  • The SHFE March zinc contract price fell by 90 yuan to 26,200 yuan per tonne.
  • The SHFE May nickel contract price slid 890 yuan to 103,850 yuan per tonne.

Currency moves and data releases
  • The dollar index was down by 0.02% at 89.20 as of 9.53am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up 0.3% to $70.21 per barrel as of 9.51am Shanghai time.
  • In equities, the Shanghai Composite was up by 0.1% to 3551.81 as of 10.46 am Shanghai time.
  • In US data on Thursday, new home sales dropped to 625,000 in December from 689,000 previously. Initial jobless claims came in at 233,000, below expectations but higher than 216,000 in the previous month, while the CB leading index rose 0.6% in December, following a 0.5% gain in November.
  • Today, we have several key national gross domestic product growth rate readings, including those from the United Kingdom and United States. Other US data out later today includes durable goods orders and wholesale inventories.
  • Finally, the fourth day of the World Economic Forum annual meeting in Davos, Switzerland, takes place today.

LME snapshot at 01.53am London time
Latest three-month LME Prices
  Price ($ per tonne)  Change since yesterday's close ($)
Copper 7,098 -40
Aluminium 2,230 -11
Lead 2,588 -17
Zinc 3,447 -18
Tin / /
Nickel 13,605 -80
SHFE snapshot at 09.53am Shanghai time
Most-traded SHFE contracts
  Price (yuan per tonne)  Change since yesterday's close (yuan)
Copper  53,440 -400
Aluminium 14,750 -40
Zinc 26,200 -90
Lead 19,450 -200
Tin  147,650 760
Nickel  103,850 -890

Changjiang spot snapshot on January 26
  Range (yuan per tonne)  Change (yuan)
Copper  53,210 —53,230 -350
Aluminium 14,460 — 14,500 -90
Zinc 26,120 —26,920 -120
Lead 19,350 —19,550 -150
Tin  146,000—147,500 0
Nickel  102,650 —102,950 -150

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