LIVE FUTURES REPORT 12/03: SHFE base metals prices little changed to weaker; Cu bucks trend

Most base metals prices on the Shanghai Futures Exchange were little changed to down during the morning trading session on Tuesday March 12, with lingering concerns over a weak macroeconomic backdrop pressuring the complex. Copper was the lone metal to secure any gains this morning.

The most-traded May copper contract on the SHFE stood at 49,310 yuan ($7,330) per tonne as at 10.54am Shanghai time, up by 120 yuan per tonne or 0.2% from Monday’s close of 49,190 yuan per tonne.

The red metal is finding support from weakness in the US currency; the dollar index, at 97.04 as at 11am Shanghai time, continues to retreat from the multi-month high of 97.72 reached on March 5.

“The USD retreated overnight, most notably against the GBP due to Brexit optimism. We’ll probably see another very choppy headline-driven day on the pound ahead of today’s vote,” Jeffrey Halley, senior market analyst at foreign exchange company Oanda, said in a morning note.

Later today, UK members of parliament (MPs) will vote on an amended deal regarding the United Kingdom’s exit from the European Union in the process known as Brexit. Despite news overnight that UK prime minister Theresa May and president of the European Commission Jean-Claude Juncker had agreed to a series of changes in the latest Brexit deal, it is still widely expected that MPs will reject the deal.

With this and other major macroeconomic releases expected later on Tuesday, market participants seem to have adopted a wait-and-see strategy which has allowed base metals prices to consolidate downward so far today.

While copper has bucked the trend to tick up this morning, gains in the red metal have been limited while it contends with high stocks in the Chinese domestic market and news that Indonesia had granted export permits to several producers.

“Gains were muted after reports that Indonesia had approved export permits for various producers. Freeport will now be allowed to ship about 198,000 tonnes of copper concentrate until March 2020, constraints have been in place due to a disagreement with authorities regarding its Grasberg copper mine,” Felicity Emmett, senior economist at ANZ, said in a morning note.

Rising copper stocks in China have also kept investors cautious; deliverable copper stocks at SHFE warehouses totaled 236,169 tonnes on March 8, an increase of 117% from the 108,890 tonnes recorded at the start of the year.

Shanghai-bonded copper stocks are similarly elevated; stocks totaled 534,500-540,000 tonnes on Monday, compared with the 2018 low of 381,000-386,000 tonnes on October 22, according to Fastmarkets’ assessment.

The rising stock levels have fueled market participants’ concerns over weakened downstream demand.

Base metals prices

  • The SHFE May copper contract inched up by 120 yuan per tonne to 49,310 yuan per tonne.
  • The SHFE May aluminum contract was down by 5 yuan per tonne to 13,520 yuan per tonne
  • The SHFE April lead contract fell by 75 yuan per tonne to 17,390 yuan per tonne.
  • The SHFE May zinc contract dipped by 65 yuan per tonne to 21,475 yuan per tonne.
  • The SHFE May nickel contract was down by 150 yuan per tonne to 102,100 yuan per tonne.
  • The SHFE May tin contract price was down by 50 yuan per tonne to 146,850 yuan per tonne.

Currency moves and data releases

  • The dollar index was little changed at 97.04 as at 11am Shanghai time.
  • In equities, the Shanghai Composite rose by 1.61% to 3,075.69 as at 11.30am Shanghai time.
  • In data on Monday, German industrial production fell by 0.8% in January from the prior month, which was worse than the expected 0.5% month-on-month increase. The country’s adjusted trade surplus – which is the balance of exports and imports of goods – narrowed to €18.5 billion ($20.8 billion) in January from €19.9 billion in the previous month.
  • In US releases on Monday, retail sales rose a modest 0.2% in January after a decline of 1.6% in December 2018. Business inventories rose by 0.6% in December 2018 from the prior month, which was in line with expectations.
  • In data on Tuesday, there is a host of releases from the UK with highlights that include gross domestic product (GDP), manufacturing production, construction output, goods trade balance and industrial production. There is also a key UK parliamentary vote on Brexit scheduled for Tuesday, the result of which could have a significant impact on sterling.
  • Key releases from the United States on Tuesday include the headline and core consumer price indices.
  • In addition, US Federal Open Market Committee member Lael Brainard is speaking.

London Metal Exchange, base metals prices

Shanghai Futures Exchange, base metals prices

Changjiang spot prices, base metals prices