SHFE CLOSE – Base metals end lower; copper stocks up 17 pct on the week

Base metals trading on the Shanghai Futures Exchange ended lower this Friday, as global growth concerns continue to imply the slowing demand for base metals.

While risk sentiments stabilised slightly overnight after better US data out last night, general mood in the financial markets remain cautious, with equities and commodities prices consolidating recent losses.

In data out yesterday, releases were more encouraging than Wednesday’s disappointing data. US unemployment claims came at 264,000, beating the forecast by 22,000, and there was a one-percent increase in industrial production for September. The Philly Fed manufacturing index also beat expectations at 20.7, while the capacity utilisation rate was up at 79.3 percent.

For the day ahead, the data docket is more subdued, with just key data focusing on US – Housing starts, preliminary inflation expectations and consumer sentiments.

In equities market, Asian indices are mixed, with the Nikkei 225 declining 1.39 percent to 14,533, the Shanghai composite losing 0.66 percent while the Hang Seng is up 0.34 percent.

“Given the weaker economic backdrop and with the tighter fundamentals in aluminium, zinc, nickel and lead not expected until later next year, some weakness seems justified… In the short term, prices might get some lift as bargain hunting takes advantage of the recent price weakness,” said Head of Research at FastMarkets, William Adams.

In the metals, copper December futures on the SHFE fell 1.4 percent or 680 yuan to end at Rmb 46,750, the lowest in the month. Spot copper in Changjiang is off by 600 yuan at Rmb 47,500-47,800, the backwardation with the futures is at an equivalent of around $171 per tonne and the LME/Shanghai copper arb ratio is 1 to 7.13 for the December contract.

Open interest for the active copper contract decreased close to 16,000 at 252,252.

Weekly copper stocks in warehouses monitored by the SHFE increased in the week of October 13, data released today showed. Copper inventories stood at 97,235 tonnes on Friday, increasing 13,937 tonnes or close to 17 percent over the week.

Aluminium price in China fell for the fourth consecutive day, losing 65 yuan to close at Rmb 13,595. Deliverable stocks went up 5,434 tonnes to 245,903 tonnes.

Zinc lost 120 yuan to end the day at 16,170 yuan, the lowest in the month as well. In inventory data, deliverable zinc stocks increased a modest 45 tonnes and continued to stay near its lowest in a year at 147,296 tonnes. Zinc stocks have fallen for a prior consecutive twelve weeks before this week’s increase.  

Lead December futures traded lower by 20 yuan to close at Rmb 13,530 per tonne. Stocks saw a decrease of 667 tonnes this week to total 72,923 tonnes.

Gold inventory stayed at 1,902 kg while silver stocks increased 8,325 kg to 103,132 kg.

In steel, rebar stocks declined 3,301 tonnes to 47,134 tonnes, while wire rod stocks were again flat at zero.