LIVE FUTURES REPORT 05/11: SHFE copper price up amid easing trade tensions; nickel falls by 2.6%

Copper prices on the Shanghai Futures Exchange edged up during the morning trading session on Tuesday November 5, supported by improved risk sentiment following positive trade developments.

News that China is reviewing locations in the United States where Chinese President Xi Jinping would be willing to meet US counterpart Donald Trump to sign the first phase of a trade deal between the two nations has sparked optimism in global markets this morning.

Meanwhile, US officials are reported to be debating the removal of existing tariffs on Chinese goods to help seal a partial trade deal with China has added to the renewed positivity.

Copper prices on the SHFE responded positively to the news, with the red metal’s most-traded December contract rising to 47,180 yuan ($6,707) as at 10.20am Shanghai time, up by 140 yuan per tonne – or 0.3% – from Monday’s closing price of 47,040 yuan per tonne.

Supply-side developments are also providing slight support to red metal prices.

Major copper miner Antofagasta recently announced that it has cut its 2019 copper production guidance after demonstrations and unrest in Chile affected its operations. The company reduced its full-year output guidance to 750,000-770,000 tonnes of copper, from its previous estimate of 750,000-790,000 tonnes.

But a firmer US currency is exerting some downward pressure on the base metals, which is capping further gains in the red metal.

The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was up by 0.06% at 97.60 as at 11.27am Shanghai time. This compares with a reading of 97.18 at a similar time on Monday.

Aluminium was the only other base metal to record a gain on the SHFE this morning, with a 0.2% increase to 13,975 yuan per tonne as at 10.20am Shanghai, while the others dropped across the board.

Nickel gave the worst performance with a 2.6% fall in its most-traded December contract to 130,810 yuan per tonne, while December lead and zinc fell by 0.4% and 0.3% respectively and January tin dipped by 0.2%.

Other highlights

  • The Shanghai Composite Index was up by 0.69% at 2,995.97 as at 11.29 am Shanghai time.
  • In data on Monday, the European Union’s final manufacturing purchasing managers’ index (PMI) figure for October improved to 45.9.
  • Meanwhile, the EU Sentix investor confidence index showed a level of -4.5 for the October period (with above 0 indicating economic optimism), up from -16.8 at the prior reading and topping expectations at -13.2.
  • The United Kingdom’s construction PMI over the same period fell below expectations at a level of 44.2.
  • Data on Monday, the EU’s final manufacturing purchasing managers’ index (PMI) figure for October improved to 45.9.
  • In US data on Monday, factory orders month on month for the October period fell by 0.6%, missing an expected fall of 0.5% and down from a dip of 0.1% in September.
  • Chinese data already out on Tuesday showed the Caixin services PMI disappointed at 51.1 in October, missing the expected 51.5.
  • Later, US releases including trade balance, the ISM non-manufacturing PMI, Jolts job openings and IBD/TIPP economic optimism are of note.