LIVE FUTURES REPORT 07/06: SHFE copper prices maintain upward momentum; nickel loses steam

The other metals were split into two camps with aluminium and tin marginally higher, while zinc and sister metal lead softened slightly.

The most-traded July copper contract price on the SHFE rose to 53,930 yuan ($8,434) per tonne as at 10am Shanghai time, up 890 yuan per tonne from Wednesday’s closing price.

“From the macroeconomic perspective, the US trade deficit figure released overnight narrowed to the lowest level since last September as its exports rose to a record, which indicates a stable increase in US economy. Meanwhile, China injected a net 203.5 billion yuan via its MLF [medium-term lending facility] yesterday, which added to the market liquidity,” Xianfei Ji, analyst at Guotai Junan Futures, said on Thursday.

“Besides, China’s wire and cable companies have a good operating rate now which supports the continual increase of demand for copper. Collectively with the inventory decrease seen for the red metal, we expect prices to rise further with a limit of 54,500 yuan per tonne,” Ji added.

Meanwhile, the most-traded September nickel contract price dropped to 117,520 yuan per tonne as at 10am, down 950 yuan per tonne from Wednesday’s closing price.

“Although participants should pay close attention to potential risks for nickel price coming from Sino-US trade war and Italy’s political turmoil, we still reckon the recent outlook is positive given the current tight ore supply and the growth potential of demand seen in the new-energy car battery,” Ji said.

“Nickel prices won’t fall beneath 110,000 yuan per tonne in the short term and we expect it to regain upward momentum soon,” he added.

Fluctuations in base metals prices on the London Metal Exchange overnight also affected SHFE trading sentiment during the early session on Thursday.

The three-month copper price on the LME ended trading 1.6% higher at $7,220 per tonne on Wednesday, and surpassing the $7,200-per-tonne market for the first time since early January, while nickel’s three-month price declined 0.7% to $15,635 per tonne.

Base metals prices

• The SHFE July aluminium contract price rose by 25 yuan per tonne to 14,910 yuan per tonne.
• The SHFE July zinc contract price down 45 yuan per tonne higher to 24,590 yuan per tonne.
• The SHFE September tin contract price rose by 220 yuan per tonne to 152,850 yuan per tonne.
• The SHFE July lead contract price edged down 50 yuan per tonne to 20,625 yuan per tonne.

Currency moves and data releases

• The dollar index was down by 0.08% at 93.51 as at 11.24am Shanghai time.
• In other commodities, the Brent crude oil spot price was down by 0.31% to $75.59 per barrel as at 11.24am Shanghai time.
• In equities, the Shanghai Composite was up by 0.06% to 3,117.02 as at 11.30am Shanghai time.
• US data on Wednesday showed the country’s trade deficit shrank to $46.2 billion in April from $47.2 billion a month earlier. Meanwhile, crude oil inventories recorded a surprise 2.1-million-barrel increase this week, against an expected decline of 2 million barrels.
• The People’s Bank of China (PBOC) injected 463 billion yuan into the financial market on Wednesday via its one-year MLF, with interest rates unchanged, according to a statement from the central bank.
• The fund injection via the MLF effectively rolled over 259.5 billion yuan worth of such loans maturing on Wednesday, while a net of 203.5 billion yuan of liquidity was also added to the market, PBOC said.
• In data today, we have the revised quarterly gross domestic product (GDP) reading from the European Union as well as US unemployment claims, IBD/TIPP economic optimism and natural gas storage of note.