LIVE FUTURES REPORT 05/08: SHFE base metals prices pressured by elevated trade tensions; Cu falls 1.2%

Base metals prices on the Shanghai Futures Exchange were little changed to down during morning trading on Monday August 5, with the complex coming under pressure from heightened US-China trade tensions and stock inflows at the end of last week.

Investors have broadly taken a risk-off approach to trading this morning, awaiting a potential retaliatory response from China after US President Donald Trump announced that the United States would impose a 10% tariff on another $300 billion of Chinese goods from September 1.

“The uncertainty surrounding US-China trade negotiations is dampening the risk-on sentiment among inventors who are reacting cautiously before any concrete results generated from the trade talk [are seen,” analysts with Citic Futures Research said in a morning note.

As a result, the base metals traded on the SHFE were either little changed or down this morning, with copper giving the worst performance of its peers.

The most-traded September copper contract dropped to 45,820 yuan ($6,601) per tonne as at 9.44am Shanghai time, down by 570 yuan per tonne or 1.2% from Friday’s close. The red metal price dived to a near one-month low of 45,760 yuan per tonne earlier in the session.

Rising stocks were another factor weighing on copper prices this morning. SHFE copper stocks totaled 155,971 tonnes on Friday after accounting for a 6,782-tonne inflow.

In nickel, prices managed to shrug off the less-than-favorable backdrop to secure steady gains. The most-traded October nickel contract rose by 620 yuan per tonne or 0.5% to 115,280 yuan per tonne at 9.44am Shanghai time compared with Friday’s close.

Nickel’s better performance is reflective of stabilizing upstream and downstream markets, according to analysts with China-based brokerage Guotai Junan Futures.

“The upstream nickel ore price has shown a slight uptick, and ferro-nickel spot quotations also rose. In addition, downstream stainless steel prices also recovered slightly,” the analysts said.

Other highlights

  • Lead was the second-worst performer of the SHFE base metals this morning, with the heavy metal pressured by rising stock levels. SHFE lead stocks totaled 40,497 tonnes on Friday, up by 4,777 tonnes, or 13.4%, from the prior week.
  • The most-traded September lead contract price fell to 16,235 yuan per tonne, down by 0.9% from Friday’s close.
  • The dollar index, though down from a high of 98.941 on August 1, remained in relative high ground at 98.08 as at 10.07am Shanghai time.
  • In US data on Friday, average hourly earnings on a month on month basis for the July period were up by 0.3%, unchanged from the prior reading but topping an expected climb up of 0.2%.
  • Meanwhile, the country’s non-farm employment change over the same period met expectations at 164,000, falling from a previous level of 193,000.
  • The US unemployment rate for the July period was unchanged at 3.7%, but missed an expected dip to 3.6%, while the country’s trade balance was recorded at a deficit of $55.2 billion.
  • In Chinese data this morning, the Caixin services purchasing managers’ index (PMI) fell to 51.6 in July, below an expected reading of 52. The Caixin composite index stood at 50.9 in July, up from 50.6 in June.
  • Data out later includes the UK’s services PMI and the US’ final services PMI and ISM non-manufacturing PMI.
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