LIVE FUTURES REPORT 06/02: SHFE base metals broadly lower amid gloomy market sentiment
Much like yesterday, most base metals prices on the Shanghai Futures Exchange were under pressure during Asian morning trading on Tuesday February 6, with sharp falls in the US stock market overnight damping market sentiment.
Nickel prices continued their recent run of weakness as they led the complex, with the exception of tin, lower for the second day in a row.
The SHFE’s most-traded May nickel contract fell to 101,470 yuan ($16,121) per tonne as of 10.25 am Shanghai time, down by 720 yuan per tonne or 0.7% from the previous session’s close.
Tin prices, meanwhile, were the most resilient this morning, logging a slight gain of 0.05% to 150,180 yuan per tonne as of 10.25 am Shanghai time.
On Monday, the US stock market suffered a major slide, with both the S&P 500 and Dow Industrials indices notching their biggest single-day percentage drops since August 2011. This comes after they posted their biggest weekly percentage drops since January 2016 last week.
“The drop in the US stock market was mainly attributed to the sharp rise in the yield on US 10-year bonds, which usually means higher borrowing costs for enterprises and may prompt the Federal Reserve to raise interest rates more quickly,” an analyst at Galaxy Futures said on Tuesday.
“In addition, the latest data released by the US Labor Department last week showed that wages continued to rise [in January]. Investors are generally worried that this indicates that the inflation rate will start to rise again,” the analyst added.
“A stronger non-manufacturing ISM [from the United States] was not enough to stop the global equity sell off. The [CBE Volatility Index] was trading around 30… up around 70% as the S&P and Dow Jones were down sharply,” ANZ Research said on Tuesday.
The notable surge in risk aversion and firmer dollar has damped market sentiment, resulting in general weakness across the SHFE base metals complex this morning.
Base metals prices
Currency moves and data releases
The SHFE’s most-traded May nickel contract fell to 101,470 yuan ($16,121) per tonne as of 10.25 am Shanghai time, down by 720 yuan per tonne or 0.7% from the previous session’s close.
Tin prices, meanwhile, were the most resilient this morning, logging a slight gain of 0.05% to 150,180 yuan per tonne as of 10.25 am Shanghai time.
On Monday, the US stock market suffered a major slide, with both the S&P 500 and Dow Industrials indices notching their biggest single-day percentage drops since August 2011. This comes after they posted their biggest weekly percentage drops since January 2016 last week.
“The drop in the US stock market was mainly attributed to the sharp rise in the yield on US 10-year bonds, which usually means higher borrowing costs for enterprises and may prompt the Federal Reserve to raise interest rates more quickly,” an analyst at Galaxy Futures said on Tuesday.
“In addition, the latest data released by the US Labor Department last week showed that wages continued to rise [in January]. Investors are generally worried that this indicates that the inflation rate will start to rise again,” the analyst added.
“A stronger non-manufacturing ISM [from the United States] was not enough to stop the global equity sell off. The [CBE Volatility Index] was trading around 30… up around 70% as the S&P and Dow Jones were down sharply,” ANZ Research said on Tuesday.
The notable surge in risk aversion and firmer dollar has damped market sentiment, resulting in general weakness across the SHFE base metals complex this morning.
Base metals prices
- The SHFE’s May copper contract was down by 210 yuan to 52,830 yuan per tonne.
- The SHFE’s March aluminium contract dipped 60 yuan to 14,260 yuan.
- Aluminium prices were subdued following news that Russian producer Rusal managed to increase production by 1.4% to 944,000 tonnes in the fourth quarter of 2017. This comes on the back of concerns over rising Chinese output, ANZ Research noted.
- The SHFE’s March zinc contract fell by 175 yuan to 26,630 yuan per tonne.
- The SHFE March lead contract slid 90 yuan to 19,445 yuan per tonne.
- The SHFE May tin price edged 70 yuan higher to 150,180 yuan per tonne.
Currency moves and data releases
- The dollar index was down 0.05% at 89.63 as of 10.56 am Shanghai time.
- In other commodities, the Brent crude oil spot price stabilized at $66.90 per barrel, and the Texas light sweet crude oil spot price decreased 0.24% to $63.41.
- In equities, the Shanghai Composite was down 2.15% to 3,412.55.
- In data on Monday, the UK’s services purchasing managers’ index (PMI) disappointed with a print of 53 - 54.1 had been called for. In the US, the final services PMI was in line with expectations at 53.3, while the ISM non-manufacturing PMI in January registered a print of 59.9, compared with a forecast reading of 56.5, and up from 56 in December.
- The economic agenda is fairly light today with German factory orders, a speech from German Bundesbank President Jens Weidmann, EU retail PMI and US data including trade balance, JOLTS job openings and IBD/TIPP economic optimism.
| LME snapshot at 02.25am London time | ||
| Latest three-month LME Prices | ||
| Price ($ per tonne) | Change since yesterday's close ($) | |
| Copper | 7,056 | -113 |
| Aluminium | 2,192.50 | -18.5 |
| Lead | 2,615 | -32 |
| Zinc | 3,495.50 | -52.5 |
| Tin | 21,630 | -290 |
| Nickel | 13,375 | -370 |
| SHFE snapshot at 10.26am Shanghai time | ||
| Most-traded SHFE contracts | ||
| Price (yuan per tonne) | Change since yesterday's close (yuan) | |
| Copper | 52,830 | -210 |
| Aluminium | 14,260 | -60 |
| Zinc | 26,630 | -175 |
| Lead | 19,445 | -90 |
| Tin | 150,180 | 70 |
| Nickel | 101,470 | -720 |
| Changjiang spot snapshot on February 6 | ||
| Range (yuan per tonne) | Change (yuan) | |
| Copper | 52,610—52,630 | -110 |
| Aluminium | 14,080—14,120 | -30 |
| Zinc | 26,550—27,350 | -130 |
| Lead | 19,400—19,600 | -100 |
| Tin | 146,500—148,500 | 250 |
| Nickel | 100,300—100,600 | -3,550 |