LIVE FUTURES REPORT 08/01: Rate hike concerns pressure SHFE base metals prices lower

Base metals prices on the Shanghai Futures Exchange were weaker across the board during Asian morning trading on Monday January 8, with the complex coming under pressure from news that researchers at the People’s Bank of China (PBoC) have agreed that the time may be right to raise interest rates.

The most-traded February copper contract on the SHFE stood at 54,470 yuan ($8,393) per tonne as of 02:50am Shanghai time, down by 390 yuan from Friday’s close.

Researchers at the PBoC have agreed that higher interest rates may be appropriate in the near future due to improvements in industrial prices and enterprise profitability, according to Chinese state media.

“There is room for an increase in interest rates in the short term as industrial product prices and enterprises’ profitability have improved since last year,” according to Ji Min, deputy head of the central bank’s research bureau.

Top researchers at the bank noted that higher rates would “help to squeeze asset bubbles and restrain debt expansion, as a tool to be used with broader oversight of financial activities.”

Base metals prices came under downward pressure following the news, which stoked concerns of tightened liquidity and increased credit costs among market participants.

Base metals prices weaken

  • The most-traded February aluminum contract on the SHFE fell by 125 yuan to 14,980 yuan per tonne.
  • The SHFE February zinc contract was down by 135 yuan to 25,945 yuan per tonne.
  • The SHFE February lead contract dipped by 95 yuan to 19,385 yuan per tonne.
  • The SHFE May nickel contract slid 580 yuan to 98,000 yuan per tonne.
  • The SHFE May tin contract decreased by 480 yuan to 145,120 yuan per tonne.


Currency moves and data releases

  • The dollar index was recently 0.03% higher at 92.05.
  • In other commodities, the Brent crude oil spot price edged $0.03 higher to $67.73 per barrel and the Texas light sweet crude oil spot price rose by $0.10 to $61.59 per barrel.
  • In equities, the Shanghai Composite Index was up by 0.33% to 3402.90 as of 11.29am Shanghai time.
  • In data on Friday, the US December jobs report showed 148,000 Americans joined the labor market, below the forecast of 188,000, and also much lower than the market’s expectation. The headline unemployment rate stood at 4.1%, however, while average hourly earnings increased 0.3% from the previous month, and 2.5% year on year.
  • The economic agenda is light today with German factory orders, the United Kingdom’s Halifax house price index, the European Union’s Sentix investor confidence and monthly retail sales as well as US consumer credit of note.
  • In addition, US Federal Open Market Committee members Raphael Bostic and John Williams are speaking.

LME snapshot at 02.51am London time
Latest three-month LME Prices
  Price ($ per tonne)  Change since Friday’s close ($)
Copper 7,132.5 14.5
Aluminium 2,206.5 1
Lead 2,558 3
Zinc 3,348 -4
Tin 19,890 0
Nickel 12,465 -80

SHFE snapshot at 10.50am Shanghai time
Most-traded SHFE contracts
  Price (yuan per tonne)  Change since Friday’s close (yuan)
Copper 54470 -390
Aluminium 14,980 -125
Lead 19,385 -95
Zinc 25,945 -135
Tin 145,120 -480
Nickel 98,000 -580

Changjiang spot snapshot on Monday January 8

 

Range (yuan per tonne)

Change (yuan)

Copper

54,350-54,370

-410

Aluminium

14,700-14,740

-60

Zinc

26,020-26,820

-30

Lead

19,250-19,450

0

Tin

142,500-144,500

0

Nickel

97,150-97,650

-800

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