LIVE FUTURES REPORT 01/03: Stronger dollar keeps SHFE base metals prices under pressure

Base metals traded on the Shanghai Futures Exchange were broadly lower during Asian morning trading on Thursday March 1, with a resurgent dollar keeping the complex under pressure.

The most-traded April copper contract on the SHFE fell to 52,375 yuan ($8,280) per tonne as of 10.13am Shanghai time, down by 210 yuan from the previous day’s close.

A significant recovery in the dollar over the past few days has continued to curb investors’ appetite for the base metals in general.

The dollar index reached a high of 90.75 earlier in the day - its highest since January 18. The recent low being 88.24 on February 16, which was the lowest point since late 2014.

“The base metals complex has retreated on the back of a stronger dollar index after US Federal Reserve chairman Jerome Powell maintained his hawkish rhetoric during his testimony on Tuesday to Congress,” Metal Bulletin analyst Andy Farida said.

“Furthermore, the stronger-than-expected CB consumer confidence data for February supported the dollar index to erode psychological resistance at 90.00,” he added.

Meanwhile, rising copper stock levels at SHFE warehouses have further compounded the gloomy sentiment surrounding the red metal.

SHFE copper stocks totaled 218,532 tonnes on February 23, up by 20,773 tonnes from the 197,759 tonnes recorded on February 14 - the last trading day before Chinese New Year holiday (February 15-21).

“Approaching March, downstream consumption is expected to improve and ease the stock pressure. However, there are concerns that the market will remain volatile as a result of the sharp decline in US equities and rebound in the dollar,” Citic Futures Research said.

Base metals prices under pressure; aluminium, zinc most resilient

  • The SHFE April aluminium contract price inched 10 yuan higher to 14,335 yuan per tonne.
  • The SHFE April zinc contract price gained 45 yuan to 26,445 yuan per tonne.
  • The SHFE April lead contract price declined 85 yuan to 19,120 yuan per tonne
  • The SHFE May tin contract price fell 550 yuan to 147,520 yuan per tonne.
  • The SHFE May nickel contract price slid 750 yuan to 104,260 yuan per tonne.

Currency moves and data releases

  • The dollar index was little changed at 90.7 as of 10.14am Shanghai time.
  • In other commodities, the Brent crude oil spot price was down by 0.21% to $64.58 per barrel as of 09.57am Shanghai time.
  • In equities, the Shanghai Composite was up by 0.35% to 3270.82 as of 10.49 am Shanghai time.
  • In US data on Wednesday, preliminary gross domestic product (GDP) for the final quarter of 2017 was in line with expectations with growth of 2.5%. Meanwhile, the Chicago purchasing managers’ index (PMI) fell 3.8 points to 61.9 in February, down from 65.7 in January, to the lowest level since August 2017. US new home sales in January also fell considerably with a decline of 4.7%, reaching their lowest level in over three years at 104.6.
  • In data today, China’s Caixin manufacturing PMI rose to 51.6 from 51.5 previously, also besting the forecast print of 51.2.
  • A flurry of data is expected later including manufacturing PMI releases out across Europe and the United States. Other US data of note includes the core PCE Price Index, personal spending and unemployment claims.
  • In addition, US Federal Reserve chairman Jerome Powell will give his second testimony to the Senate Banking Committee today.
LME snapshot at 02.14am London time
Latest three-month LME Prices
Price ($ per tonne) Change since yesterday’s close ($)
Copper 6,949.50 18.5
Aluminium 2,138 6
Lead 2,502 0
Zinc 3,468 20.5
Tin 21,550 20
Nickel 13,690 -100
SHFE snapshot at 10.13am Shanghai time
Most-traded SHFE contracts
Price (yuan per tonne) Change since yesterday’s close (yuan)
Copper 52,380 -210
Aluminium 14,335 10
Zinc 26,445 45
Lead 19,120 -85
Tin 147,520 -550
Nickel 104,260 -750

Changjiang spot snapshot on March 1
Range (yuan/t) Change (yuan)
Copper 52,040 —52,060 -380
Aluminium 14,130 — 14,170 120
Zinc 26,330 —27,130 30
Lead 19,100 —19,300 -100
Tin 146,000—147,500 -500
Nickel 103,400 —103,700 -700
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