LIVE FUTURES REPORT 07/12: SHFE copper price edges higher on dip buying but remains vulnerable

Copper prices on the Shanghai Futures Exchange edged higher during Asian morning trading on Thursday December 7, with the red metal’s weakness of late seeming to attract some dip buying.

The most-traded February copper contract on the SHFE stood at 51,480 yuan ($7,784) per tonne as of 10.15am Shanghai time, up by 30 yuan from the previous session’s close, with around 93,000 lots having changed hands.

SHFE copper prices have recovered slightly from the steep falls experienced on Wednesday, supported by the emergence of dip buying. The SHFE February copper contract price fell as low as 51,060 yuan per tonne yesterday, its lowest since September 29.

“Copper fundamentals are still largely positive. In addition, the falls in prices will likely trigger demand [from bargain hunters]. In general, there is limited space for copper prices to fall further,” China’s Guotai Junan Futures said on Thursday.

Yet, lingering concerns regarding China’s economic out and persistent profit-taking in the run-up to the end of the year may continue to weigh on red metal prices.

“Investors are continuing to fret about the outlook for demand in China, while the fast approaching year-end may have also induced some profit-taking in the market,” ANZ Research said.

Meanwhile, rising stocks and reduced liquidity in preparation for the end of year should also pressure red metal prices.

“Analysts note that further to rising copper inventories, concerns are growing over liquidity tightness in China towards the year-end during a government-led deleveraging push,” John Meyer of SP Angel said.

Copper stocks London Metal Exchange rose a net 1,125 tonnes to 193,675 tonnes on Wednesday, following a sharp rise of more than 10,000 tonnes on Tuesday.

Zinc supported by low stock levels

  • The SHFE February zinc contract price moved up 165 yuan to 24,670 yuan per tonne.
  • Declining LME stocks are providing support to prices.
  • LME zinc stocks fell a net 2,400 tonnes to 204,850 tonnes on Wednesday.
  • “The supply tightness in zinc concentrates has persisted. Meanwhile, more zinc refineries will have planned maintenance during December-January period. Therefore, chances are that domestic zinc inventories will remain at low levels in the near term,” Citic Futures Research said.

All other base metals lower, bar lead

  • The SHFE May nickel contract price dropped by 280 yuan to 87,720 yuan per tonne.
  • The SHFE February aluminium contract price fell by 175 yuan to 14,220 yuan per tonne.
  • The SHFE January lead contract price rose 40 yuan to 18,760 yuan per tonne.
  • The SHFE January tin contract price dip 570 yuan to 140,180 yuan per tonne.

Currency moves and data releases

  • The dollar index was up by 0.06% to 93.58 as of 10.16am Shanghai time.
  • In other commodities, the Brent crude oil spot price rose by 0.28% to $61.36 per barrel while the Texas light sweet crude oil spot price inched up by 0.04% at $56.08.
  • In equities, the Shanghai Composite was down by 0.51% to 3,277.03.
  • In data on Wednesday, the US ADP employment report showed 190,000 Americans joined the labor market in November. The revised non-farm productivity and unit labor costs during the third quarter grew 3% and fell 0.2% respectively.
  • The economic agenda is fairly light today with the UK’s Halifax house price index and unemployment claims from the United States of note.
  • In addition, European Central Bank president Mario Draghi is speaking.
LME snapshot at 02.16am London time
Latest three-month LME Prices
($ per tonne)
Change since yesterday’s close ($)
Copper 6,568.50 18.5
Aluminium 2,015 -4
Lead 2,494 -13
Zinc 3,104 19
Tin 19,450 -30
Nickel 10,820 15

SHFE snapshot at 10.15am Shanghai time
Most-traded SHFE contracts
(yuan per tonne)
Change since yesterday’s close (yuan)
Copper 51,480 30
Aluminium 14,220 -175
Zinc 24,670 165
Lead 18,760 40
Tin 140,180 -570
Nickel 87,720 -280

Changjiang spot snapshot on December 7
Range (yuan/t) Change (yuan)
Copper 51,470 —51,490 140
Aluminium 13,930 — 13,970 -100
Zinc 25,070 —25,870 90
Lead 18,650 —18,850 100
Tin 140,000—141,000 -250
Nickel 87,550 —87,750 200
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