LIVE FUTURES REPORT 11/05: SHFE zinc prices rise as stocks fall

Base metals prices on the Shanghai Futures Exchange were mixed during Asian morning trading on Monday May 28, with zinc, nickel and tin registering gains, while aluminium prices were flat and those of copper and lead fell.

In zinc this morning, the most-traded July zinc contract on the SHFE was at 23,885 ($3,736.79) yuan per tonne at 11:15 am Shanghai time, rising 195 yuan per tonne from Friday’s close. About 277,872 lots had changed hands.

Zinc prices were likely buoyed by strong outflows from Asian warehouses over the past week as zinc stocks fell 6,710 tonnes to 80,410 tonnes, according to Metal Bulletin’s SHFE stock report last Friday.

LME zinc stocks had decreased 125 tonnes to 229,150 tonnes, according to Galaxy Futures.

However, the bullish outlook was expected to be shortlived, according to Galaxy Futures, which said that “while SHFE zinc prices are seen to be rising, the price will continue to be weak, pressured by market fundamentals”.

Zinc prices on the SHFE also tracked those on the London Metal Exchange higher as the US dollar weakened since last Friday. Zinc’s three-month price edged $16 higher to $3,050 per tonne on the LME on Friday.

Meanwhile, the dollar index was down by 0.29% at 93.97 as at 11.05am Shanghai time, compared with a reading of 93.92 at roughly the same time on last Friday.

“In the absence of any further escalation in trade tension and geopolitical risks, we look for some consolidation against the USD,” ANZ Research said.

“Also, the likelihood of increased oil output from Russia and Saudi Arabia is likely to keep prices under pressure,” the report continued.

Other base metals prices mixed

  • The SHFE July aluminium contract on the SHFE traded at 14,825 yuan per tonne, flat on Friday’s close.
  • The SHFE July copper contract price edged down 10 yuan to 51,480 yuan per tonne at 10:57 am Shanghai time, with 106,192 lots changing hands.
  • The SHFE July lead contract price dropped 130 yuan to 19,865 yuan per tonne.
  • The SHFE Sept tin contract price surged 3,290 yuan to 149,830 yuan per tonne.
  • The SHFE July nickel contract price rose 430 yuan to 110,310 yuan per tonne.

Currency moves and data releases

  • The dollar index fell 0.29% to 93.97 as of 11:05 am Shanghai time.
  • In other commodities, the Brent crude oil spot price plummeted 1.57% to $74.93 per barrel as of 11:05 am Shanghai time.
  • In equities, the Shanghai Composite rose 0.18% to 3,146.85 as of 12.13pm Shanghai time.
  • Economic indicators-wise, the final University of Michigan final May consumer sentiment index slipped to 98.0 from its 98.8 preliminary reading while US April Durable Goods Orders fell by a slightly more than expected 1.7%.
  • In Japan, the services producer price index was positive at 0.9%, versus a forecast of 0.5%.
  • The economic agenda is light today with bank holidays in the US and UK, of note is the release of Japan’s unemployment rate number.