LIVE FUTURES REPORT 23/03: SHFE base metals plunge after Trump orders further tariffs on Chinese imports

Base metal prices on the Shanghai Futures Exchange traded sharply lower during Asian morning trading on Friday March 23 after United States President Donald Trump signed off on import tariffs for Chinese products, triggering fears of a global trade war and slowdown in global economic growth.

The most-traded May copper contract on the SHFE was at 50,140 yuan ($7,922) per tonne as of 10.44am Shanghai time, down by 1,100 yuan per tonne from Thursday’s closing price, with around 316,000 lots of the contract traded.

A risk-off tone ensued among risk assets after President Trump on Thursday signed a memorandum that would implement 25% tariffs on up to $60 billion in imports from China. A list of products that will attract the tariffs will be announced within 15 days, but is expected to include items in aerospace, information technology and machinery.

This follows Trump’s recent sign off on import tariffs on steel and aluminium imports into the US.

China retaliated against the earlier steel and aluminium tariffs, announcing on Friday that it will impose tariffs on a range of US products including a 25% import tax on recycled aluminium and 15% on seamless steel tubes.

China’s Ministry of Commerce in a statement on Friday also called the US’ latest planned tariffs on its imports “a disregard of World Trade Organization rules” and “typical unilateralism and trade protectionism”.

“The trade wars have officially started. The question moving forward is how far and quickly they will escalate,” financial broker IG said in a report on Friday.

There is some respite, however, on news that more countries would be exempted from the US Section 232 tariffs on steel and aluminium imports. The US Trade Representative (USTR) has said the European Union, Argentina, Australia, Brazil and South Korea will be exempted from the US Section 232 tariffs on steel and aluminium imports - at least temporarily - with other countries in line to begin negotiations.

“The 15-day grace period granted for the [Section 232] metals tariffs is due to end. It is highly likely that China will feel the pinch from this tax as well - as will likely many other smaller countries who have little leverage to negotiate for a favor. As we look forward, how aggressively these countries respond to their counterparts’ actions will determine how quickly this situation will weigh on the globe,” IG added.

All base metals lower
  • The SHFE May aluminium contract slipped 225 yuan to 13,745 yuan per tonne.
  • The SHFE May zinc contract dipped 195 yuan to 24,650 yuan per tonne.
  • The SHFE May lead contract price decreased 360 yuan to 18,495 yuan per tonne.
  • The SHFE July nickel contract fell 3,190 yuan 98,590 yuan per tonne.
  • The SHFE May tin contract price was down 1,940 yuan to 142,880 yuan per tonne.

Currency moves and data releases
  • The dollar index fell 0.11% to 89.60 as of 10.39am Shanghai time. The index had reached as low as 89.39 on Thursday, the lowest since March 7.
  • In other commodities, the Brent crude oil spot price rose 0.75% to $69.66 per barrel as of 10.40am Shanghai time.
  • In equities, the Shanghai Composite dropped 2.71% to 3,175.12 as of 10.41am Shanghai time, tracking the risk-off mood on the Dow Jones Industrial Average which closed 2.93% or 724 points lower at 23,957.89 on Thursday.
  • In US data released on Thursday, weekly unemployment claims came in at 229,000, close to forecast of 225,000, while the January house price index (HPI) at 0.8% bested forecast of 0.4%.
  • US March flash manufacturing PMI at 55.7 was close to expectations of 55.4, but flash services PMI for the same month disappointed at 54.1 - 55.9 was called for. The February US CB leading index was at 0.6%, higher than forecast of 0.5%.
  • Economic data due later today includes US core durable goods order, durable goods orders and new home sales, as well as China’s CB leading index.

SHFE snapshot at 10.44am Shanghai time
Most-traded SHFE contracts
  Price (yuan per tonne) Change since previous session's close (yuan)
Copper (May) 50,140 -1,100
Aluminium (May) 13,745 -225
Zinc (May) 24,650 -195
Lead (May) 18,495 -360
Tin  (May) 142,880 -1,940
Nickel  (Jul) 98,590 -3,190

LME snapshot at 02.44am London time
Latest three-month LME Prices
  Price ($ per tonne) Change since previous session's close ($)
Copper 6,671.50 -23.5
Aluminium 2,069 -6
Lead 2,350 -18
Zinc 3,211.50 -8.5
Tin 20,775 -75
Nickel 13,065 -125

Changjiang spot snapshot on March 23
  Range (yuan per tonne) Change (yuan)
Copper  49,830-49,850 -1,070
Aluminium 13,530-13,570 -190
Zinc 24,700-24,750 -100
Lead 18,550-18,750 -100
Tin  142,500-144,500 -1,000
Nickel  98,250-98,850 -3,200

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