LIVE FUTURES REPORT 02/03: SHFE copper, aluminium prices edge higher; rest weaker

Weakness continued across the SHFE base metals complex this morning with the relatively stronger dollar and thin liquidity restricting the metals.

Aluminium and copper have shown the most resilience, however, with the former finding slight support from the news that US President Donald Trump will enact a 10% tariff on aluminium imports into the United States as a result of the Section 232 investigation into the national security impact of such imports.

The most-traded April aluminium contract on the SHFE rose to 14,430 yuan ($2,272) per tonne as of 10.00am Shanghai time, up by 40 yuan from the previous day’s close.

“The market views the imposition of tariffs and quotas on US imports as positive for prices,” ANZ Research noted on Friday.

But, high stock levels and softer raw materials prices are placing downward pressure on primary aluminium prices, checking any significant gains in the light metal this morning.

“The supply side is bearing a lot of pressure due to a ramp up in domestic inventory levels,” China’s Citic Futures Research said.

In addition, a softening of alumina prices in China has also dented sentiment surrounding primary aluminium.

Metal Bulletin assessed the Chinese alumina price at 2,700-2,800 yuan per tonne on March 1, down from 2,750-2,850 yuan per tonne a week ago.

Copper prices buoyed by dip-buying

• The SHFE April copper contract price rose 80 yuan to 52,350 yuan per tonne as of 10.00am Shanghai time.
• The emergence of dip-buying following copper’s decline since the start of the week has lent slight support to red metal prices.
• The most-traded April copper contract price on the SHFE closed yesterday’s official session at 52,290 yuan per tonne, down 1,300 yuan from 53,590 yuan per tonne at the close on February 23.
• A halt in the dollar’s recovery has also supported copper prices this morning.
• The dollar index was quoted at 90.19 as of 10.01am Shanghai time, falling from an overnight high of 90.93. The index remains in relative high ground, however, with the recent low being 88.24 on February 16, which was the lowest point since late 2014.
• “The USD broadly sold off alongside US yields, as fears around a trade war escalated. Momentum may extend with little data from Asia today,” ANZ Research said.

Other metals weaker

• The SHFE April zinc contract price declined by 235 yuan to 26,195 yuan per tonne.
• The SHFE April lead contract price dropped by 215 yuan to 18,865 yuan per tonne
• The SHFE May tin contract price fell 200 by yuan to 147,130 yuan per tonne.
• The SHFE May nickel contract price slid by 2,500 yuan to 102,280 yuan per tonne.

Currency moves and data releases

• The dollar index was down 0.05% at 90.19 as of 10.01am Shanghai time.
• In other commodities, the Brent crude oil spot price was down 0.32% to $63.95 per barrel as of 10.01am Shanghai time.
• In equities, the Shanghai Composite was down by 0.63% to 3253.09 as of 10.42 am Shanghai time.
• In US data on Thursday, the manufacturing ISM purchasing managers’ index (PMI) rose to elevated 60.8, while the core PCE index was in line with expectations at 1.5%. Personal income and spending rose 0.4% and 0.2% respectively, both in line with their previous readings.
• The economic agenda is fairly light today with UK construction PMI and revised University of Michigan consumer sentiment and inflation expectations expected.
• In addition, UK Prime Minister Theresa May and Bank of England governor Mark Carney are speaking.