LIVE FUTURES REPORT 09/05: SHFE base metals prices fall on stronger dollar; zinc most resilient

Base metals prices on the Shanghai Futures Exchange were down across the board during Asian morning trading on Wednesday May 9, dragged lower by the stronger dollar. Zinc prices, trading little changed to weaker, were the most resilient of the complex.

A stronger dollar has weakened investors’ appetite for the base metals this morning.

The dollar index jumped above 93 on Tuesday - the first time since late December last year - following US President Donald Trump’s announcement that the United States would be withdrawing from a multilateral nuclear pact with Iran, with plans to reinstate sanctions against the latter.

The index has continued to strengthen this morning. It was up by 0.08% at 93.18 as at 11.33am Shanghai time – this compared with a high of 93.29 on Tuesday.

Markets are adopting a wait-and-see approach in response to the US’ decision to withdraw from the Iran nuclear deal, waiting to see just how the decision will play out in terms of heightened geopolitical stress in the Middle East.

The more cautious tone in the market has also applied downward pressure to prices.

The most-traded July copper contract on the SHFE traded at 51,090 yuan ($8,020) per tonne as at 11.33 am Shanghai time, down 280 yuan per tonne from Tuesday’s close. Around 110,644 lots had changed hands.

This weakness despite positive trade data out of China on Tuesday that showed total unwrought copper imports in April climbed by 47.3% year on year to 442,000 tonnes, according to ANZ Research.

The higher import volumes dispelled concerns of weakening growth in the world’s largest commodity consumer although with the US-China relations floundering on trade negotiations based on last week’s talks, China will now likely send Vice Premier Liu He to the US to try to rescue the negotiations.

Yet the outlook for the red metal still remains murky according to INTL FCStone analyst Edward Meir, who noted that the industry’s current bearish environment can be chalked up to five factors.

Base metals prices
  • The SHFE July aluminium contract retreated 90 yuan per tonne to 14,665 yuan per tonne.
  • The SHFE July zinc contract price dipped 5 yuan per tonne to 23,810 yuan per tonne.
  • The SHFE June lead contract price fell 45 yuan per tonne to 18,910 yuan per tonne.
  • The SHFE September tin contract price declined 650 yuan per tonne to 145,540 yuan per tonne.
  • The SHFE July nickel contract price dropped 1,310 yuan per tonne to 103,850 yuan per tonne.

Currency moves and data releases
  • The dollar index edged up 0.08% to 93.18 as at 11.33 am Shanghai time.
  • In other commodities, the Brent crude oil spot price climbed 0.98% to $76.69 per barrel as at 11.33 am Shanghai.
  • In equities, the Shanghai Composite dipped 0.1% to 3,157.85 as at 1.28pm Shanghai time.
  • In US data today, we have the producer prices, final wholesale inventories and crude oil inventories of note.

LME snapshot at 04.17am London time
Latest three-month LME Prices
  Price ($ per tonne) Change since previous session's close ($)
Copper 6,810 -65
Aluminium 2,370 -12
Lead 2,310 -21.5
Zinc 3,089 28.5
Tin 20,990 65
Nickel 13,870 -15
SHFE snapshot at 11.33am Shanghai time
Most-traded SHFE contracts
  Price (yuan per tonne) Change since previous session's close (yuan)
Copper (July) 51,090 -280
Aluminium (July) 14,665 -90
Zinc (July) 23,810 -5
Lead (June) 18,910 -45
Tin  (Sept) 145,540 -650
Nickel  (July) 103,850 -1,310
Changjiang spot snapshot on May 9
  Range (yuan per tonne) Change (yuan)
Copper  50,800-50,840 -230
Aluminium 14,550-14,590 -70
Zinc 24,030-25,030 0
Lead 18,900-19,100 50
Tin  144,000-146,000 -250
Nickel  104,500-104,800 -250

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