LIVE FUTURES REPORT 05/11: SHFE base metals prices fall as hopes over US-China trade settlement cool; copper bucks trend

Market participants latched onto reports last week that US President Donald Trump had asked officials to draft a US-China trade deal, easing risk-off sentiment, but the positive mood quickly switched gears after Kudlow stated there was no such order. While hopes still linger that Trump and Chinese President Xi Jinping will talk at the sidelines of the G20 Summit in Argentina in mid-November and work to resolve the trade spat, uncertainties have dented sentiment once more.

With the exception of copper’s most-traded December contract, which rose 0.3% to 50,040 yuan ($7,258) per tonne, base metals prices were all lower in Asian morning trading.

Fastmarkets analysts Boris Mikanikrezai noted in Friday’s copper report that robust fundamental dynamics are conducive to stronger prices in the medium term, adding that the global refined copper market is expected to see a deficit of 137,000 tonnes this year, reflecting a 2.5% growth in global refined production and a 2% growth in global consumption.

Meanwhile, all other base metals prices fared negatively, with zinc’s most-traded December contract price marking the biggest decrease of 1.5%, followed by nickel’s most-traded January contract price, which shed 1%.

Chinese domestic demand for nickel in October was weaker than expected, according Fastmarkets analyst Andy Farida.

Farida said battery demand has slowed due to poor business and mild oversupply in the battery market, while output from Indonesian mines continues to accelerate.

Base metals prices

• The SHFE January nickel contract was down 1,000 yuan per tonne to 97,680 yuan per tonne.
• The SHFE December zinc contract dropped 315 yuan per tonne to 21,550 yuan per tonne.
• The SHFE December lead contract fell 35 yuan per tonne to 18,715 yuan per tonne.
• The SHFE January tin contract was down 680 yuan per tonne to 145,960 yuan per tonne.
• The SHFE December copper contract rose 150 yuan per tonne to 50,040 yuan per tonne.
• The SHFE December aluminium contract declined 55 yuan per tonne to 13,905 yuan per tonne.

Currency moves and data releases

• The dollar index was slightly down at 96.47 as at 9.42am Shanghai time.
• In equities, the Shanghai Composite Index had dropped 1% to 2,649.84 as at 11.30am Shanghai time.
• In European data last Friday, French final manufacturing PMI for September-October was unchanged and in line with expectations at 51.2, while German final manufacturing PMI was below expectations at 52.3.
• Also, the EU’s final manufacturing PMI for September-October came in at 52, short of both the expected and previous figure of 52.1.
• Meanwhile, the latest US jobs report showed that 250,000 Americans joined the labor market, surging past the 194,000 forecast. The unemployment rate remained at 3.7%, while average hourly earnings rose by 0.2%.
• The US trade balance came in at -$54.0 billion, while factory orders increased by 0.7% month on month.
• In European data today, we have the Sentix investor confidence report, Spain’s unemployment change statistics and the UK’s services PMI.
• The US is also releasing its final services PMI data today.