LIVE FUTURES REPORT 05/06: SHFE lead in the driver’s seat; growth in copper prices slows

Lead prices on the Shanghai Futures Exchange outperformed during Asian morning trading on Tuesday June 5, supported by low inventory levels and supply-side concerns.

The most-traded July lead contract price on the SHFE rose to 20,425 yuan ($3,185) per tonne as at 10am Shanghai time, up 540 yuan per tonne from Monday’s closing price.

Stringent environmental regulations in China that came into effect in March have seen many off-grade secondary lead factories in the country shut, which has led to a wider supply deficit in the market.

Declining stock levels have exacerbated the situation.

Lead stocks in SHFE-approved warehouses fell to 10,967 tonnes in the week to June 1, down 13% or 1,709 tonnes from the prior week’s 12,676 tonnes.

“The environmental protection governance efforts so far this year have been beyond expectation, and has led to the significant shrinkage in [lead] supply. We don’t expect relief in the short term,” Citic Futures Research said.

Meanwhile, copper prices continued their recent run of strength, albeit at a slower pace, after trading activity thinned and investors looked to take profits at these elevated levels.

The most-traded July copper contract price on the SHFE rose to 52,040 yuan per tonne as at 10am, up 280 yuan per tonne from Monday’s close.

“Copper prices remained in an upward trend on firm downstream demand in the domestic market. However, given the current high prices of copper, trading activity has thinned of late and traders’ intentions to lock in profits has strengthened,” Xianfei Ji, analyst of Guotai Junan Futures, said on Tuesday.

Base metals prices

  • The SHFE July aluminium contract price dipped 10 yuan per tonne to 14,630 yuan per tonne.
  • The SHFE July zinc contract price gained 80 yuan per tonne to 24,185 yuan per tonne.
  • The SHFE July nickel contract price fell 380 yuan per tonne to 116,450 yuan per tonne.
  • The SHFE September tin contract price rose 490 yuan per tonne to 152,270 yuan per tonne.

Currency moves and data releases

  • The dollar index was up by 0.02% at 94.05 as at 11.30am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.12% to $75.44 per barrel as at 11:30am Shanghai time.
  • In equities, the Shanghai Composite was up by 0.23% to 3,098.34 as at 11:30am Shanghai time.
  • In data on Monday, the European Union’s Sentix investor confidence came in at 9.3 compared with a forecast print of 18.6, and down from 19.2 previously.
  • The economic agenda is fairly busy today with data already out showing China’s Caixin purchasing managers’ index (PMI) was in line with expectations at 52.9.
  • Later, we have a host of services PMI data out across Europe and the United States. Other US data of note includes the ISM non-manufacturing PMI, Jolts job openings and the IBD/TIPP economic optimism.
  • In addition, German Bundesbank President Jens Weidmann is speaking.
LME snapshot at 3am London time
Latest three-month LME Prices
($ per tonne)
Change since yesterday’s close ($)
Copper 6,970 -5
Aluminium 2,313 -1
Lead 2,492 -14
Zinc 3,111 -11
Tin 20,620 45
Nickel 15,385 -100

SHFE snapshot at 10am Shanghai time
Most-traded SHFE contracts
(yuan per tonne)
Change since yesterday’s close (yuan)
Copper (July) 52,040 280
Aluminium (July) 14,630 -10
Zinc (July) 24,185 80
Lead (July) 20,425 540
Tin (September) 152,270 490
Nickel (July) 116,450 -380

Changjiang spot snapshot on June 05
Range (yuan per tonne) Change (yuan)
Copper 51,860-51,900 0
Aluminium 14,510-14,550 0
Zinc 24,440-25,440 0
Lead 20,150-20,350 0
Tin 150,500-153,000 500
Nickel 117,450-117,550 0
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