LIVE FUTURES REPORT 09/10: SHFE base metals mostly higher; copper strengthens on supply-side concerns

The most-active November copper contract on the SHFE traded at 52,130 yuan ($7,830) per tonne as of 03:40 BST, up 290 yuan compared with the close on September 29.

Concerns of tight supply ahead of a traditional peak demand season for copper has lent support to red metal prices this morning.

“In the physical market, the supply of red metal was tight before [China’s] week-long National Day Golden week holiday (October 1-7) as [copper] stocks on the SHFE continuously declined, with over 100,000 tonnes coming out of SHFE-approved warehouses in September. In the meantime, inventories in the [Shanghai] bonded area have also been decreasing,” an analyst with China’s Galaxy Futures said.

Deliverable copper stocks on the SHFE fell for a sixth consecutive week on September 29 with inventories declining 38,167 tonnes to 103,151 tonnes.

More recently, stocks on the London Metal Exchange declined a net 2,625 tonnes to 293,460 tonnes, with 1,750 tonnes freshly cancelled on Friday.

“October is a peak season for copper demand and downstream consumers will begin a new round of restocking after returning from the holiday, which should further support copper prices going forward,” the Galaxy Futures analyst added.

“The risk-off tone that impacted investor appetite late on Friday is unlikely to spill over into this week. With fundamentals remaining constructive, commodities should start the week with a positive bias,” ANZ Research said on Monday.

The global refined copper market recorded a deficit of 70,000 tonnes in June, pushing the supply/demand balance to a deficit of 75,500 tonnes between January and June 2017, the International Copper Study Group estimates.

Nickel leads the complex higher; tin bucks trend

• The SHFE’s January nickel contract was the outperformer this morning, rallying by 2.3% or 1,950 yuan to 86,750 yuan per tonne, compared with its closing price on September 29.
• The SHFE November zinc contract surged 1.8% or 470 yuan to 26,540 yuan.
• The SHFE December aluminium contract rose 155 yuan to 16,600 yuan.
• The SHFE January tin price edged lower 790 yuan to 147,630 yuan per tonne.
• The SHFE November lead contract declined 120 yuan to 21,100 yuan.

Currency moves and data releases

• The dollar index was down 0.04% to 93.74 so far today.
• In other commodities, the Brent crude oil spot price was up 0.36% to $55.70 per barrel, and the Texas light sweet crude oil spot price increased 0.43% to $49.36.
• In equities, the Shanghai Composite was up 1.17% to 3,388.
• In data today, China released its Caixin Composite Output Index this morning, which covers manufacturing and services companies. The index fell to 51.4 in September from 52.4 in August, marking a three-month low. Meanwhile, China’s Caixin General Services Business Activity Index declined to 50.6 last month from 52.7 in August, the worst reading since December 2015.
• The economic agenda is light today with German industrial production and EU Sentix investor confidence due.