LIVE FUTURES REPORT 06/11: SHFE copper price marginally up, others fall

Copper was the lone base metal on the Shanghai Futures Exchange to record a gain during the morning trading session on Wednesday November 6, with growing supply concerns providing support.

The most-traded December copper contract on the SHFE stood at 47,310 yuan ($6,746) per tonne as at 10.20am Shanghai time, up by 60 yuan per tonne – or 0.1% – from Tuesday’s close of 47,250 yuan per tonne.

Despite its meagre gains, copper was the best performer of the SHFE base metals this morning because it was the only metal to record a gain.

This comes after a strong performance by the London Metal Exchange three-month copper price on Tuesday, when it ended the day up by 1.1% at $5,946.50 per tonne compared with the previous day’s $5,877 per tonne close. The price had hit an intraday high of $5,978 per tonne while turnover exceeded 16,000 lots.

The red metal continues to be supported by positive fundamentals.

The International Copper Study Group (ICSG) estimates the refined copper market was in a deficit of 220,000 tonnes in the first half of 2019, larger than the deficit of 177,000 tonnes in the same period of 2018.

Meanwhile, unrest in Chile has affected operations at copper major Antofagasta, causing the miner to cut its 2019 copper production guidance. This alongside further drawdowns in global stocks remain support of red metal prices.

Copper stocks at LME-registered warehouses totaled 248,000 tonnes on Tuesday, down from 299,600 tonnes on July 17. SHFE copper stocks stood at 149,911 tonnes on November 1, marking a decline of 43.3% from the annual high of 264,601 tonnes recorded on March 15.

At the same, Shanghai-bonded copper stocks continued to decline in October, falling to 253,000-256,000 tonnes at the end of last month from 292,000-295,000 tonnes a month earlier. Bonded copper stocks are now just above their lowest ever level of 250,000 tonnes reached on October 26, 2015, according to Fastmarkets’ assessment.

The other base metals on the SHFE all fell during the morning trading session on Wednesday, with the December lead contract giving the worst performance in percentage terms with a 0.9% drop to 16,245 yuan per tonne from its previous close of 16,390 yuan per tonne. This was followed by a 0.6% drop in January tin to 136,210 yuan per tonne, a 0.3% fall in December zinc to 18,865 yuan per tonne, a 0.2% dip in December aluminium to 13,935 yuan per tonne and a 0.2% drop in December nickel to 130,930 yuan per tonne.

Other highlights

  • The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was down by 0.04% at 97.88 as at 11.38am Shanghai time. This compares with a reading of 97.60 at a similar time on Tuesday.
  • The Shanghai Composite Index was down by 0.19% at 2,985.91 as at 11.30 am Shanghai time.
  • In data on Tuesday, the United States’ ISM non-manufacturing purchasing managers’ index rose to 54.7 in October, surpassing the forecast 53.5.
  • Job openings in the US fell to 7.024 million in September, falling short of the expected 7.063 million and the prior month’s 7.031 million.
  • In data on Wednesday, there is a host of services PMI data out across Europe, retail sales from the European Union as well as preliminary nonfarm production and unit labor costs and weekly crude oil inventories from the US.