LIVE FUTURES REPORT 05/12: SHFE base metals prices broadly up following trade developments; Zn up 0.8%

Renewed optimism that a phase one trade deal between China and the United States could soon be reached gave a boost to most of the base metals traded on the Shanghai Futures Exchange during the morning session on Thursday December 5.

This morning’s broadly positive performance follows reports on Wednesday that a partial US-China trade deal may be nearing. This despite comments from US President Donald Trump a day earlier that he was prepared to wait until after next year’s presidential elections to reach a deal.

In the latest development, Bloomberg News reported that US negotiators expect a phase one deal to be signed before December 15, the day when the US is expected to impose additional tariffs on Chinese goods.

“The [Bloomberg] report goes on to suggest that a Phase 1 agreement can still be agreed prior to the December 15 deadline when, as things stand, the US is due to impose 15% tariffs on a further $160 billion or so of Chinese imports – most of them consumer goods,” National Australia Bank’s head of foreign exchange strategy Ray Attrill said in a morning note.

“Trump reported that trade talks are now going “very well”, which was a turnaround from the previous day when he said a deal may not be reached until after the elections,” ANZ Research analyst John Bromhead said in a morning note.

“Base metals rallied, with copper and zinc up strongly amid hopes of a US-China trade deal,”Bromhead added.

Zinc, as it did on the London Metal Exchange at the close on Wednesday, led the charge higher among the base metals. The metal’s most-traded January contract on the SHFE climbed to 17,990 yuan ($2,548) per tonne as at 10.25am Shanghai time, up 150 yuan per tonne – or 0.8% – from Wednesday’s close of 17,840 yuan per tonne.

Gains across the rest of the complex were more subdued, however: January copper gained 190 yuan per tonne – or 0.4% – to 47,170 yuan per tonne this morning, January lead inched up by 30 yuan per tonne – or 0.2% – to 15,055 yuan per tonne and February nickel was up by 140 yuan per tonne – or 0.2% – to 104,220 yuan per tonne.

Meanwhile, January tin and aluminium registered losses of 0.5% and 0.2% respectively.

Other highlights

  • The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was up by 0.03% at 97.76 as at 12.30am Shanghai time.
  • The Shanghai Composite Index was down by 0.34% at 2,874.88 as at 11.30 am Shanghai time.
  • In US data on Wednesday, the ADP non-farm employment change showed job growth slowed to a crawl in November, with private payrolls increasing by just 67,000. This is well below the expected rise of 137,000. The Institute for Supply Management (ISM) non-manufacturing purchasing managers’ index was similarly disappointing at 53.9 last month, down from 54.7 previously.
  • It is a busy day for data on Thursday with highlights that include the European Union’s revised gross domestic product and the US’ trade balance and factory orders. There are also Organization of Petroleum Exporting Countries (Opec) meetings scheduled throughout the day.