LIVE FUTURES REPORT 10/07: Sideways trading dominates SHFE base metals complex; zinc prices slide

Base metals prices on the Shanghai Futures Exchange were mixed during Asian morning trading on Tuesday July 10 with most of the complex oscillating either side of unchanged, while zinc was the early session’s weakest performer with a drop of 1.7%.

The most-traded August zinc contract fell to 21,820 yuan ($3,295) per tonne as at 10.23am Shanghai time, a drop of 385 yuan per tonne or 1.7% from Monday’s close.

This morning’s weakness follows a poor performance by the three-month zinc price on the London Metal Exchange on Monday, when the metal fell 1.1% to end the day just above $2,700 per tonne.

Rising stocks on the LME-approved warehouses and tight fundamentals continue to hinder zinc, with its total LME inventory climbing more than 28% since the start of the year.

LME zinc’s cash/three-month spread has eased considerably this week and was in a backwardation of $11 per tonne on Monday, easing from a backwardation of $55 per tonne last week.

The rest of the base metals on the SHFE traded sideways with only slight changes as at 10.23am Shanghai time. This follows a firmer performance on Monday in which the base metals benefitted from a return of risk-on trading amid more positive sentiment in the market due to easing trade tensions.

Base metals prices

  • The SHFE September nickel contract inched up by 80 yuan per tonne to 111,910 yuan per tonne.
  • The SHFE September copper contract was down by 100 yuan per tonne to 49,890 yuan per tonne.
  • The SHFE September aluminium contract edged up by 10 yuan per tonne to 14,175 yuan per tonne.
  • The SHFE September tin contract rose by 90 yuan per tonne to 144,050 yuan per tonne.
  • The SHFE August lead contract fell by 170 yuan per tonne to 19,465 yuan per tonne.

Currency moves and data releases

  • The dollar index was down by 0.02% to 94.07 as at 11.25am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.23% to $78.33 per barrel as at 10.24am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.03% to 2,814.24 as at 11.24am Shanghai time.
  • In data today, China’s consumer price index (CPI) rose 1.9% year on year in June, compared with 1.8% for May, data from the country’s National Bureau of Statistics showed. Meanwhile, China’s producer price index (PPI) rose 4.7% last month, beating an expected reading of 4.5% and a previous rise of 4.1% in May.
  • Later, we have industrial production from Italy and France along with UK data that includes gross domestic product (GDP), manufacturing production, goods trade balance, construction output, index of services and industrial production.
  • US data out later includes NFIB small business index and Jolts job openings.