LIVE FUTURES REPORT 04/12: SHFE base metals mostly higher; copper prices propped up by short-covering

The most-traded January copper contract on the SHFE stood at 53,450 yuan ($8,076) per tonne as of 11.30am Shanghai time, up by 550 yuan from last Friday’s close, with around 180,000 lots changing hands so far.

Open interest of the contract was at 148,152 positions as of 10:15 am Shanghai time, down from 153,326 positions at last Friday’s close.

The rebound in SHFE copper prices is weak, with limited upside strength in the near term, China’s Ruida Futures said late last Friday. The broker recommended clients sell at 52,400-53,200 yuan per tonne and buy at low levels.

Base metals prices have been broadly supported by recent Chinese purchasing managers’ index (PMI) readings, which although were below expectations for the Caixin number, showed that China’s economy remained in expansion mode, some market watchers noted.

China’s November Caixin PMI was at 50.8 versus an expected reading of 51.2. A reading above 50 indicates expansion, while below signals contraction.

On November 30, China’s official November PMI came in at 51.8, beating both the forecast of 51.4 and the previous figure of 51.6.

“While the official gauge showed another month in expansionary territory, the private sector version by Caixin dipped slightly. Even so, it remained above 50 and was enough to remove any doubt in investors’ minds about the outlook in the short term,” ANZ Research said on Monday.

Meanwhile, strike concerns remain at Southern Peru Copper Corp and Teck’s Quebrada Blanca copper mine.

Copper stocks in Shanghai bonded warehouses fell 20,000 tonnes or 4.1% month on month to 460,000-470,000 tonnes in late November, according to Metal Bulletin’s assessment.

Deliverable copper stocks at SHFE-approved warehouses, however, increased by 4,174 tonnes or 2.5% last week to 168,987 tonnes as of December 1.

Other metals higher, bar aluminium

• The SHFE January aluminium contract price dipped by 75 yuan to 14,525 yuan per tonne amid concerns that Chinese winter output cuts may not be as severe as expected.
• “It is difficult for aluminium price to move higher as smelters lack drive to cut production due to high smelting profits,” China’s Minmetals Jingyi Futures said last Friday.
• SHFE aluminium stocks continued to climb. It rose 7,749 tonnes over the past week to 702,321 tonnes as of December 1.
• The SHFE May nickel contract price surged by 1,700 yuan to 91,850 yuan per tonne amid dip buying.
• The SHFE January lead contract price rose by 315 yuan to 19,065 yuan per tonne
• The SHFE January zinc contract price gained 480 yuan to 25,665 yuan per tonne.
• The SHFE January tin contract price increased by 890 yuan to 141,560 yuan per tonne.

Currency moves and data releases

• The dollar index rose by 0.26% to 93.11 as of 11.50am Shanghai time.
• In other commodities, the Brent crude oil spot price fell by 0.42% to $63.34 per barrel as of 03.50am London time.
• In equities, the Shanghai Composite was up by 0.12% to 3,321.65.
• On Sunday, the US Senate passed its tax reform bill. “In the next step, a House-Senate conference committee will work to resolve the differences between the House and Senate tax bills. With both bills calling for a reduction in the corporate tax rate to 20%, US tax reform progress is expected to help sustain growth in corporate capital investments and [merger and acquisition] activities,” Credit Suisse said.
• In US data from last Friday, final manufacturing PMI for November came in marginally higher at 53.9 from an expected rollover of 53.8. The ISM manufacturing PMI for November was at 58.2, slightly below forecast of 58.4. October construction spending rose 1.4%, higher than expectations of a 0.5% increase. November ISM manufacturing prices disappointed at 65.5 - a reading of 67 was called for.
• Data due later today includes US factory orders, UK construction PMI, and European Sentix investor confidence and producer price index.