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

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.