LIVE FUTURES REPORT 06/12: SHFE copper price plunges on heavy stock inflows; other base metals weaker

Copper prices on the Shanghai Futures Exchange suffered their steepest fall in recent months during Asian morning trading on Wednesday December 6, following a significant rise in deliverable red copper stocks on the London Metal Exchange on Tuesday.

The most-traded January copper contract on the SHFE stood at 51,170 yuan ($7,733) per tonne as of 10.32am Shanghai time, down by 1,390 yuan from the previous session’s close, with around 204,000 lots having changed hands.

LME copper stocks rose a net 10,125 tonnes to 192,550 tonnes on Tuesday following deliveries to various locations in Asia, including Busan, Kaohsiung, Singapore, and Port Klang.

“LME copper stocks increasing by over 10,000 tonnes [on Tuesday] is the major driver for the plunge in copper prices,” Citic Futures Research said on Wednesday.

“Meanwhile, with the majority of increases taking place at Asian warehouses this has triggered market participants’ concerns about Chinese demand in the run-up to the end of the year,” it added.

“Copper fell […] after data showed a sharp rise in stockpiles. Both the LME and Shanghai Exchange saw volumes of deliverable metal rise. Reports that there are further inflows coming saw traders head for the exits,” ANZ Research noted.

The other SHFE base metals were similarly weaker this morning with their own concerns about Chinese demand weighing on the complex while a stronger dollar has also dented investor appetite for commodities.

The dollar index was marginally lower at 93.3 as of 10:33am Shanghai time, but had reached as high as 93.49 on Tuesday - its highest since November 30.

The dollar has found support after the US Senate passed its tax reform bill on Sunday.

Base metals down across the board

  • The SHFE May nickel contract price dropped by 2,870 yuan to 87,580 yuan per tonne.
  • Nickel was the worst performer so far today and prices have fallen to their lowest levels since October 10, continuing to be pressured by the weak consumption outlook over China’s winter period.
  • The SHFE January lead contract price fell 260 yuan to 18,650 yuan per tonne
  • The SHFE January zinc contract price eased 450 yuan to 24,650 yuan per tonne.
  • The SHFE January tin contract price dipped 490 yuan to 139,860 yuan per tonne.
  • The SHFE February aluminium contract price slid 250 yuan to 14,370 yuan per tonne.

Currency moves and data releases

  • The dollar index was down by 0.01% at 93.3 as of 10.33am Shanghai time.
  • In other commodities, the Brent crude oil spot price dipped by 0.05% to $62.59 per barrel while the Texas light sweet crude oil spot price weakened by 0.12% to $57.35.
  • In equities, the Shanghai Composite was down by 0.61% to 3,283.69.
  • In data on Tuesday, US data broadly disappointed: the goods and services deficit increased by $3.8 billion to reach $48.7 billion in October; the final services purchasing managers’ index (PMI) missed with a reading of 54.5 in November, compared with an expected reading and previous reading of 55.4 and 54.7 respectively; and the ISM non-manufacturing PMI surprised to the downside with a print of 57.4 - a reading of 59.2 had been expected.
  • The economic agenda is fairly light today with mainly the ADP non-farm employment change and crude oil inventories from the United States of note.
LME snapshot at 02.33am London time
Latest three-month LME Prices
Price ($/t) Change since yesterday’s close ($)
Copper 6,528.5 -14.5
Aluminium 2,045 -7
Lead 2,475 -25
Zinc 3,095 -17
Tin 19,400 -125
Nickel 10,815 -50
SHFE snapshot at 10.32am Shanghai time
Most-traded SHFE contracts
Price (yuan/t) Change since yesterday’s close (yuan)
Copper 51,170 -1,390
Aluminium 14,370 -250
Zinc 24,650 -450
Lead 18,650 -260
Tin 139,860 -490
Nickel 87,580 -2,870

Changjiang spot snapshot on December 6
Range (yuan/t) Change (yuan)
Copper 51,330 —51,350 -1,990
Aluminium 14,030 — 14,070 -370
Zinc 24,980 —25,780 -640
Lead 18,550 —18,750 -350
Tin 140,000—141,500 -1,000
Nickel 87,350 —87,550 -4,050
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