LIVE FUTURES REPORT 02/07: SHFE base metals prices broadly down; tin bucks the trend

Base metals prices on the Shanghai Futures Exchange were mostly down during Asian morning trading on Monday July 2, with market sentiment dampened by disappointing Chinese economic data released over the weekend.

The most-traded August copper contract on the SHFE dipped to 51,480 yuan ($7,775) per tonne as at 10.01am Shanghai time, down by 180 yuan per tonne or 0.4% from last Friday’s close.

A weaker-than-expected reading for China’s official manufacturing purchasing managers’ index (PMI), a key indicator for the country’s economic growth, dented market sentiment on the first trading day of the second half of the year.

China’s official manufacturing PMI fell to 51.5 in June from 51.6 in the prior month and falling short of a forecast reading of 51.9. A reading above 50 indicates expansions, while below contraction.

The country’s non-manufacturing PMI was slightly above expectations at 55, against a forecast reading of 54.7.

“Data over the weekend is likely to see investors question whether there are more clouds ahead for the sector,” ANZ Research noted on Monday. “This is likely to raise concerns that China’s GDP growth will weaken further in H2 2018.”

Meanwhile, China’s Caixin manufacturing PMI released this morning also indicated a slowing of growth in the economy – the index dipped to 51 in June, from 51.1 in May.

Rising inventory levels were a further headwind for the red metal.

Copper stocks at SHFE-listed warehouses rose 8,574 tonnes last week to 263,968 tonnes on June 29. This after a 2,377-tonne increase in the prior week.

Tin was the only SHFE base metal to trade in positive territory this morning, with supply-side concerns supporting the metal’s prices.

The most-traded September tin contract on the SHFE rose 1,060 yuan per tonne to 145,270 yuan per tonne as at 10.01am Shanghai time.

“Tin prices are being supported by supply concerns in respect to Burma’s tin concentrate shortage,” Citic Futures Research said.

SHFE tin stocks declined by 413 tonnes to 7,717 tonnes on June 29.

Other base metals prices under pressure

  • The SHFE August aluminium contract dropped 125 yuan per tonne to 14,040 yuan per tonne
  • The SHFE August lead contract slipped 100 yuan per tonne to 20,360 yuan per tonne.
  • The SHFE August zinc contract dipped 205 yuan per tonne to 23,100 yuan per tonne.
  • The SHFE September nickel contract declined 1,120 yuan per tonne to 116,560 yuan per tonne.

Currency moves and data releases

  • The dollar index was up by 0.21% to 94.79 as at 10.02am Shanghai time.
  • In other commodities, the Brent crude oil spot price was down by 0.81% to $78.57 per barrel as of 10.02am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.76% to 2,825.83 at 10.39am Shanghai time.
  • In EU data last Friday, French consumer spending for the period of May came in at the forecast level of 0.9%, down 0.6% from the previous figure. The French preliminary CPI for June came in at an expected reading of 0.1%, down 0.3% from the previous level. Elsewhere, German retail sales for May came in 0.2% lower at 2.1%, up 1.7% from the forecast figure, while German import prices for the same period were up 1% at 1.6% and 0.5% higher than the forecast.
  • In US data last Friday, core PCE inflation came in slightly firmer than expected in May at 2%.
  • In data today, there is a host of manufacturing PMI data out across Europe and the United States. Other US data of note includes construction spending and ISM manufacturing prices.