LIVE FUTURES REPORT 09/04: SHFE base metals broadly lower on trade uncertainties; Cu bucks the trend

“Uncertainty remains over Brexit and US-China trade negotiations, weighing on US investment and global trade……It will be important to watch how investment responds to any trade agreement between Washington and Beijing,” Kishti Sen, analyst at Australia and New Zealand Banking Group (ANZ), said in a morning note on Tuesday.

Despite the persistently positive fundamentals due to supply concerns, zinc led the falls among the base metals complex, tracking its downward trend on the  London Metal Exchange. The metal’s most-traded May contract on the SHFE dropped to 22,630 yuan ($3,368) per tonne as at 09.40am Shanghai time, down by 0.96% – or 220 yuan per tonne – from Monday’s close of 22,850 yuan per tonne.

The three-month zinc contract on the LME was at $2,879.5 per tonne as at 11.11am Shanghai time, down 0.91% from the previous day’s close of $2,906.5 per tonne.

The LME zinc price came under pressure with LME zinc stock levels seeing a rare net inflow of 2,500 tonnes on Monday after accounting for an outflow of 1,050 tonnes. LME zinc stocks totalled 51,875 tonnes as of April 8.

“But adding to the current bearish spin is the fact that total canceled warrants have continued down to 5,150 tonnes, from 11,675 tonnes at the end of March,” Andy Farida, Fastmarkets’ research analyst pointed out.

In addition, the softening of most base metals came despite a further weakening of the US dollar index, which was at 97.03 as at 09.40am Shanghai time, down from the previous day’s close of 97.08.

Other highlights

• Copper is the only SHFE base metals to tick higher today, on the backdrop of a weaker dollar and positive demand expectations. The most-traded June copper contract on the SHFE climbed to 49,500 yuan per tonne as at 09.40am Shanghai time, up by 0.39%, or 190 yuan per tonne, from Monday’s close of 49,310 yuan per tonne.
• In EU data on Monday, the German trade balance for the March period was recorded at a surplus of €18.7 billion ($20.97 billion), up from €18.6 billion the month before and missing an expected rise to €19 billion. Sentix Investor Confidence for the March period was recorded at -0.3, up from -2.2 previously. Meanwhile, the United Kingdom’s consumer inflation expectations were stable at 3.2%.
• In US data out on Monday, factory orders fell by an expected 0.5% month on month. Final February durable goods orders fell by 1.6% month on month, also in line with expectations.
• The macro-market calendar is light on Tuesday, but with the Swiss March unemployment rate, Italian February retail sales data and the US February JOLTS job vacancy numbers all worthy of attention.