LIVE FUTURES REPORT 08/11: SHFE copper outperforms on fresh trade optimism

Copper outperformed its peers on the Shanghai Futures Exchange during the morning trading session on Friday November 8, with the red metal benefiting from renewed optimism after China said that the United States has agreed in principle to remove some tariffs as part of the first phase of a trade deal.

The most-traded January copper contract on the SHFE rose to 47,460 yuan ($6,789) per tonne as at 10.12am Shanghai time, up by 210 yuan per tonne – or 0.4% – from Thursday’s close of 47,250 yuan per tonne.

“For the moment, the two sides continue to haggle over the extent of tariff relief. China’s Ministry of Commerce representative, Gao Feng, said that the additional tariffs will be removed in phases. The White House also said that President Trump is anxious to sign a deal,” analysts with ANZ Research said in a morning note.

But a date for the signing of a deal has yet to be decided after the Asia-Pacific Economic Cooperation (Apec) summit in Chile on November 16-17 – where the two sides had previously been expected to present an interim deal – was canceled due to ongoing unrest in the Latin American nation.

“Market participants expect an initial US-China trade deal to be signed in early December and there are strong expectations that this can help nullify the negative macroeconomic backdrop that has been driven by persisting trade tensions,” Fastmarkets analyst Andy Farida said.

The renewed optimism propelled stock markets higher on Thursday, with the US’ S&P 500 and Dow both reaching new all-time closing highs at 3,085.18 and 27,674.80 respectively.

The three-month copper price on the London Metal Exchange was also buoyed by the positive trade developments. Copper’s outright price on the LME closed at $5,975 per tonne on Thursday afternoon, spiking soon after the close to reach an intraday high of $6,006.50 per tonne. It was the first time since July that the LME copper price had breached the $6,000-per-tonne resistance level.

Aluminium and tin were the only other metals on the SHFE to record gains this morning, with the December aluminium contract up by 0.4% to 14,035 yuan per tonne from its previous close and January tin up by 0.2% to 137,200 yuan per tonne. The rest of the complex drifted downward.

Other highlights

  • The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was down by 0.02% at 98.11 as at 11.30am Shanghai time.
  • The Shanghai Composite Index was up by 0.35% at 2,989.24 as at 11.30 am Shanghai time.
  • In data on Thursday, German industrial production on a month on month basis for the October period fell by 0.6%, exceeding an expected fall of 0.3%.
  • The Bank of England kept rates unchanged at 0.75% on Thursday, as was expected, but notably two policymakers voted to cut rates.
  • In data on Friday, China’s US-denominated trade surplus widened more than expected to $42.8 billion in October, up from $39.7 billion in September.
  • Data of note later includes the University of Michigan’s preliminary consumer sentiment and inflation expectations readings.
  • China’s consumer and producer price indices are scheduled for Saturday.