LIVE FUTURES REPORT 04/09: SHFE base metals prices broadly down amid rising trade tensions, disappointing China data

With the exception of lead, base metals prices on the Shanghai Futures Exchange were down during Asian morning trading on Tuesday September 4, with rising trade tensions and disappointing economic data from China dampening market sentiment.

The most-traded October copper contract on the SHFE stood at 48,020 yuan ($7,033) per tonne as at 10.28am Shanghai time, down by 0.3% or 150 yuan per tonne from Monday’s close.

“Industrials remained under pressure as rising trade tensions kept investor sentiment subdued. President Trump’s war of words against Canada amid negotiations of the [North American Free Trade Agreement] raised concerns that his stance against other countries such as China would remain combative,” ANZ Research noted on Tuesday.

“This wasn’t helped by data showing some weakness in China’s export-focused manufacturing sector,” ANZ Research added.

On Monday, the Caixin purchasing managers’ index (PMI) reading showed manufacturing growth in China slowed to a 14-month low of 50.6 in August from 50.8 in July.

Additionally, mounting trade tensions have also facilitated upticks in the dollar index, which is now back over 95, and adding downward pressure to prices amid continued trade disagreements between the United States and China.

The dollar index was up 0.12% to 95.25 as at 11.20am Shanghai time.

Lead was the lone metal on the SHFE to trade in positive territory on Tuesday morning, with the metal’s most-traded October contract climbing to 19,050 yuan per tonne as 10.28am Shanghai time, up by 185 yuan per tonne or 1% from Monday’s close.

“[Lead] prices were underpinned by the decline in global stocks,” a Shanghai-based analyst said.

Global lead stocks are down just over 23% this year due to a supply deficit of approximately 39,000 tonnes in the first half of 2018 and ongoing supply disruptions from China – largely due to the country’s environmental crackdown.

Base metals prices

  • The SHFE October zinc contract price dipped 35 yuan per tonne to 21,160 yuan per tonne.
  • The SHFE November nickel contract price fell 300 yuan per tonne to 104,830 yuan per tonne.
  • The SHFE October aluminium contract price was down 70 yuan per tonne to 14,775 yuan per tonne.
  • The SHFE January tin contract price slumped 1,060 yuan per tonne to 144,340 yuan per tonne.

Currency moves and data releases

  • The dollar index was up 0.12% to 95.25 as of 11.20am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up 0.11% to $78.06 per barrel as at 10.28am Shanghai time.
  • In equities, the Shanghai Composite was down 0.06% to 2,719.19 as of 11.30am Shanghai time.
  • In data on Monday, the United Kingdom’s manufacturing PMI for August came in below expectations at 52.8, missing a forecast print of 53.9.
  • In other European data, the European Union’s final manufacturing PMI for August came in as expected at 54.6, unchanged from the previous reading.
  • There were no US data releases on Monday due to the national Labor Day holiday.
  • Today there is a host of US data including final manufacturing PMI, ISM manufacturing PMI, construction spending, ISM manufacturing prices, IBD/TIPP economic optimism and total vehicle sales due for release.