LIVE FUTURES REPORT 08/02: SHFE base metals prices succumb to stronger dollar, profit-taking

Base metals traded on the Shanghai Futures Exchange were broadly lower during Asian morning trading on Thursday February 8, with only aluminium in positive territory, after a jump in the dollar overnight and a bout of profit-taking sank prices.

The most-traded April copper contract on the SHFE dropped to 52,020 yuan ($8,300) per tonne as of 10.21 am Shanghai time, down by 870 yuan per tonne or 1.6% from the previous day’s close.

Renewed strength in the dollar is one of the main reasons behind the broad-based weakness seen across the SHFE base metals complex this morning.

The dollar index strengthened overnight, reaching a high of 90.4 - its highest since January 23 - and was recently hovering around 90.24 as of 11.14am Shanghai time, down by 0.07%.

“The open of the Chinese night session and Comex saw renewed pressure across the board with copper falling… as the US dollar strengthened. Turnover was high as traders exited positions and conditions were volatile,” Sucden Financial noted late on Wednesday.

The constant fluctuations in global stock markets also remain a concern for market participants with the volatility experience there having the potential to spill over into commodities markets.

“Investors will remain fixated on global equity markets for the time being, but judging what effect this will have on other markets is difficult,” INTL FCStone analyst Edward Meir said.

“Base metals could easily be swept up in another equity downswing, as funds free up cash by selling commodity positions,” Meir added.

“The heavy selling in crude oil market stoked fears across the entire [commodities] complex, with base metals particularly battered. It wasn’t helped by a stronger USD, which dampened investor appetite for metals,” ANZ Research said on Thursday.

“With investors having built up a huge net long position in the sector, the selling appears to have triggered a wave of long liquidation,” the bank added.

Base metals prices

  • The SHFE May nickel contract price plummeted by 1,280 yuan or 1.25% to 100,980 yuan per tonne.
  • The SHFE March zinc contract price declined by 200 yuan to 26,280 yuan per tonne.
  • The SHFE May tin contract price fell by 1,090 yuan to 150,160 yuan per tonne.
  • The SHFE March lead contract price decreased 130 yuan to 19,070 yuan per tonne.
  • The SHFE March aluminium contract price was up by 65 yuan to 14,270 yuan per tonne.

Currency moves and data releases

  • The dollar index was down 0.11% at 90.20 as of 11.26am Shanghai time.
  • In other commodities, the Brent crude oil spot price decreased by 0.23% to $65.18 per barrel, and the Texas light sweet crude oil spot price was down by 0.31% to $61.48.
  • In equities, the Shanghai Composite was down 1.37% to 3,263.95.
  • On Wednesday, global equities pushed higher, with the strongest gains in Europe. The CBOE Volatility Index fell to 22 as the fallout from the flash crash subsided.
  • Today, we have a raft of data releases from the United Kingdom including a Bank of England inflation report, a vote on interest rates and subsequent decision and monetary policy summary. Unemployment claims from the United States is also of note.
LME snapshot at 02.22 am London time
Latest three-month LME Prices
Price ($ per tonne) Change since yesterday’s close ($)
Copper 6,924 44
Aluminium 2,168 10
Lead 2,533 25
Zinc 3,418 38
Tin 21,615 5
Nickel 13,275 100
SHFE snapshot at 10.21 am Shanghai time
Most-traded SHFE contracts
Price (yuan per tonne) Change since yesterday’s close (yuan)
Copper 52,020 -870
Aluminium 14,270 65
Zinc 26,280 -200
Lead 19,070 -130
Tin 150,160 -1,000
Nickel 100,980 -1,280

Changjiang spot snapshot on February 8
Range (yuan per tonne) Change (yuan)
Copper 51,630—51,650 -1,240
Aluminium 14,060—14,100 0
Zinc 26,200—27,000 -380
Lead 19,050—19,250 -200
Tin 147,500—150,500 -1,000
Nickel 100,100—100,400 -2,000
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