LIVE FUTURES REPORT 07/05: SHFE base metals mostly up; rising China-US tensions weigh on copper

Base metals prices on the Shanghai Futures Exchange were broadly up during Asian morning trading on Monday May 7, with the complex benefiting from a slightly easier dollar.

The dollar index was down by 0.1% at 92.47 as at 11am Shanghai time, this after it had spiked to a high of 92.91 last Friday despite disappointing US employment data for April – see data section below.

Aluminium prices have found support despite easing concerns about potential supply disruptions, stemming from the United States’ sanctions against Russian light metal producer UC Rusal.

The most-traded June aluminium contract on the SHFE traded at 14,660 yuan ($2,305) per tonne as at 11am Shanghai time, up by 85 yuan per tonne from last Friday’s close.

“Bauxite and alumina prices remain well bid, with this flowing onto the aluminium market,” ANZ Research noted on Monday.

Meanwhile, copper prices have come under pressure from renewed concerns over US-China trade tensions.

The most-traded June copper contract on the SHFE traded at 51,110 yuan per tonne as at 11am Shanghai time, down by 180 yuan per tonne from Friday’s close.

Last week saw the US and China began trade negotiations, with the former seeking to pressure China to open its markets and reduce behind-the-border trade barriers.

“However, both parties appeared to take a hard line in discussions, with the US insisting China cuts it $337 billion a year trade surplus with the US by almost two-thirds. This was quite different from the earlier optimism, and now raises the specter of ongoing trade tensions between the two counties,” ANZ Research said.

This week, all eyes will be on US President Donald Trump’s decision regarding the Iran nuclear deal on Friday.

Investors have increasingly priced in the impact of US pulling out but markets will likely remain jittery over any headlines before the May 12 deadline.

The London Metal Exchange is closed today due to national holidays.

Base metals prices

  • The SHFE June lead contract price rose 360 yuan per tonne to 18,910 yuan per tonne.
  • The SHFE Sept tin contract price fell 330 yuan per tonne to 147,470 yuan per tonne.
  • The SHFE June zinc contract price jumped 510 yuan per tonne to 23,810 yuan per tonne.
  • The SHFE July nickel contract price rebounded 630 yuan per tonne to 104,540 yuan per tonne.

Currency moves and data releases

  • The dollar index inched down by 0.12% to 92.47 as at 11am Shanghai time.
  • In other commodities, the Brent crude oil spot price climbed 0.36% to $75.21 per barrel as at 11am Shanghai.
  • In equities, the Shanghai Composite increased 1.21% to 3,128.34 as at 11.36am Shanghai time.
  • In US data last Friday, the April jobs report disappointed with 164,000 Americans joining the labor market, against an expected 190,000. Average hourly earnings also missed with a 0.1% increase last month, after gaining 0.2% in March. The unemployment rate, however, was viewed as positive after it dipped below 4% – the first time since December 2000.
  • The economic agenda is light today with retail purchasing managers’ index (PMI) and Sentix investor confidence from the European Union of note.
  • In addition, US Federal Open Market Committee members Raphael Bostic and Thomas Barkin are speaking.

SHFE snapshot at 11:00am Shanghai time
Most-traded SHFE contracts
  Price (yuan per tonne) Change since previous session’s close (yuan)
Copper (June) 51,110 -180
Aluminium (June) 14,660 85
Zinc (June) 23,810 510
Lead (June) 18,910 360
Tin  (Sept) 147,470 -330
Nickel  (July) 104,540 630
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