LIVE FUTURES REPORT 09/12: Strong US jobs report pulls SHFE base metals prices higher; Cu climbs 1.8%

Base metals prices on the Shanghai Futures Exchange were up across the board during the morning trading session on Monday December 9, supported by better-than-expected US jobs data and positive trade developments.

The upward momentum seen across the SHFE base metals complex was mainly the result of strong US employment figures released at the end of last week (see other highlights below), which spurred optimism of a near-term bound in the US and global economies.

“US job gains roared back in November as unemployment matched a fresh half-century low and wages topped estimates, giving the Federal Reserve more reason to hold interest rates steady after three straight cuts,” Stephen Innes, chief Asia market strategist at Axitrader, said on Monday.

“And [this] should add to policymakers’ confidence that consumer spending will be able to toe the line amidst the soft patch in business investment,” Innes added.

Sentiment was further bolstered by reports over the weekend that indicated China and the US are moving closer to a phase one trade deal, with the former saying it will waive import tariffs for some soybeans and pork shipments from the US.

“The [Chinese] finance ministry said it had started the process of waiving retaliatory tariffs on imports of US pork and soy by domestic companies,” ANZ Research analyst Daniel Been said in a morning note.

The brighter macroeconomic backdrop saw copper outperform its peers on the SHFE this morning; the red metal ended the morning trading session at 48,240 yuan ($6,856) per tonne, up by 840 yuan per tonne – or 1.8% – from Friday’s close of 47,400 yuan per tonne.

“Driving the copper resilience is its solid fundamental backdrop (reflected in lower visible inventories) in a context in which copper prices have become increasingly more driven by the fundamentals since September,” Fastmarkets analyst Boris Mikanikrezai said.

Deliverable copper stocks at SHFE-listed warehouses totaled 112,667 tonnes on Friday, down by 7,525 tonnes from a week earlier. On a monthly basis, stocks are down by 24.8% from early November.

Fastmarkets assessed Shanghai-bonded copper stocks at 262,000-266,000 tonnes at the end of November, down by 34.2% year on year.

Gains across the rest of the complex were more marginal: January aluminium and January zinc were both up by 0.5%, at 13,910 yuan per tonne and 18,115 yuan per tonne respectively while January lead inched up by 0.1% to 15,135 yuan per tonne.

January tin rose 0.6% or 850 yuan per tonne to 140,060 yuan per tonne and February nickel increased 0.7% or 710 yuan per tonne to 106,950 yuan per tonne.

Other highlights

  • In US data on Friday, the unemployment rate stood at its lowest in 50 years at 3.5% in November, lower than the expected 3.6%. Non-farm payrolls increased by 266,000 last month, significantly more than the forecast 181,000. Average hourly earnings disappointed however, coming in below the expectations with a 0.2% month-on-month increase.
  • Additionally, the University of Michigan’s preliminary consumer sentiment jumped to 99.2 from an upwardly revised 96.8 previously.
  • China’s data on showed the dollar-denominated trade balance narrowed to $38.7 billion from $42.8 billion previously.
  • The economic agenda is light today with the Germany trade balance and European Sentix Investor Confidence due.