LIVE FUTURES REPORT 11/03: SHFE base metals prices mixed, remain under pressure from lackluster China data

With the exception of those for zinc, SHFE base metals prices were little changed on Monday morning; copper, tin and nickel recorded marginal gains while aluminium and lead fell slightly.

The most-traded May copper contract on the SHFE stood at 49,050 yuan ($7,296) per tonne as at 10.40am Shanghai time, up 10 yuan per tonne from last Friday’s close.

This sideways trading in copper and indeed most of the other base metals follows the release of lackluster economic data from China last Saturday; China’s producer price index rose by 0.1% year on year in February, marking its slowest pace since September 2016, data from the National Bureau of Statistics (NBS) showed.

The 0.1% year-on-year increase in February was also below the 0.2% year-on-year rise that had been expected.

“China’s lower than anticipated PPI reading for February has made market participants concerned about the country’s possible weaker demand for commodities this year, which in turn has weighed on base metals prices,” a Shanghai-based macroeconomic analyst told Fastmarkets.

Meanwhile, China’s consumer price index (CPI) rose by 1.5% year on year in February, in line with forecasts, but down from January’s 1.7% year-on-year rise.

“China’s CPI reading for February marked the third consecutively increase of below 2%, indicating moderate levels of inflation in the country currently,” the analyst added.

In addition to the weak macroeconomic data from China, the red metal is also contending with rising stocks at SHFE warehouses and weaker physical demand, Chinese broker Guotai Junan said in a morning note.

Copper stocks at SHFE-listed warehouses rose by 9,120 tonnes to 236,169 tonnes last Friday. This compares with a total of 108,890 tonnes at the start of the year.

Meanwhile, Chinese trade data for February fueled concerns of weak demand for commodities from the country.

“China’s trade data for February proved weaker than expected, both in terms of imports and exports – particularly for copper,” Fastmarkets’ analyst Boris Mikanikrezai said.

Imports of unwrought copper and copper products for February dropped to 311,000 tonnes, down 35% month on month and down 12% year on year, according to China’s customs data.

Imports for January-February at 790,000 tonnes were flat on the year, reflecting subdued appetite at the start of the year.

“Physical premiums in China continue to fall, in part driven by soft downstream demand, which is incidentally consistent with the latest import data and the notable increase in domestic exchange inventories,” Mikanikrezai said.

Base metals prices

• The SHFE May copper contract inched up by 10 yuan per tonne to 49,050 yuan per tonne.
• The SHFE May aluminum contract was down by 25 yuan per tonne to 13,485 yuan per tonne
• The SHFE April lead contract fell by 65 yuan per tonne to 17,410 yuan per tonne.
• The SHFE May zinc contract was up by 210 yuan per tonne to 21,400 yuan per tonne.
• The SHFE May nickel contract was up by 330 yuan per tonne to 102,430 yuan per tonne.
• The SHFE May tin contract price was up by 400 yuan per tonne to 147,540 yuan per tonne.

Currency moves and data releases

• The dollar index was little changed at 97.42 as at 11.01am Shanghai time.
• In equities, the Shanghai Composite rose by 1.22% to 3,006.19 as at 11.30am Shanghai time.
• In data on Friday, China’s yuan and dollar-denominated trade surpluses both narrowed sharply in February, coming in at 34 billion yuan and $4.1 billion respectively.
• In US data on Friday, the unemployment rate shrank to 3.8%, while earnings rose 0.4%. But this was dampened by the fact only 20,000 Americans joined the labor market, a big miss from the forecast 180,000.
• In data on Monday, Germany’s industrial production and trade balance are due along with US releases that include retail sales and business inventories.
• In addition, UK Monetary Policy Committee member Jonathan Haskel is speaking.