LIVE FUTURES REPORT 12/04: SHFE base metals broadly under pressure on rising geopolitical tensions

Base metals prices on the Shanghai Futures Exchange were broadly lower during Asian morning trading on Thursday April 12, with rising geopolitical tensions subduing risk appetite in the market.

The most-traded June copper contract on the SHFE dropped to 50,710 yuan ($8,076) per tonne as of 09.57am Shanghai time, down by 390 yuan from Wednesday’s close.

Geopolitical tensions picked up overnight after United States President Donald Trump made heated remarks about Russia’s involvement in Syria in a tweet, with a warning that American missiles may soon strike Syria after last week’s suspected chemical attack.

“That missile tweet was sufficient to frighten the horses to some extent, dampening risk sentiment,” an analyst from National Australia Bank said on Thursday.

“The likelihood of the US attacking Syria has triggered risk-off sentiment in the market. Copper prices are vulnerable to swings,” Citic Futures Research noted.

“We may also see some profit-taking from longs,” it added.

Adding further downward pressure to copper prices was the overnight release of the minutes from the US Federal Open Market Committee (FOMC) which showed that officials leaned towards a faster pace of rate increases at their March meeting.

“Officials said that the stronger economic outlook and increased confidence about rising inflation meant the path of interest rates would ‘likely be slightly steeper than they previously expected’,” ANZ Research noted on Thursday.

The reaction in the dollar to the news was fairly subdued given slightly weak US data overnight – see currency moves and data releases below.

Aluminium price edges lower

  • The SHFE June aluminium contract price fell 100 yuan to 14,275 yuan per tonne.
  • The recent run of strength for aluminium fizzled out after participants focused on the high domestic inventories in China.
  • “SHFE aluminium prices won’t track LME aluminium prices higher in the near term due to limited domestic spot trades and high inventories,” Citic Futures Research noted.
  • “US sanctions on Rusal might bring some impact to Southeast Asian market. As for China, it still takes time to feel any real impact. Therefore, people still need to focus on the fundamentals in domestic market,” a trader said.

Other base metals lower, bar lead

  • The SHFE June zinc contract price declined 715 yuan to 23,865 yuan per tonne.
  • The SHFE May tin contract price slid 1,230 yuan to 143,050 yuan per tonne.
  • The SHFE July nickel contract price dipped 250 yuan to 101,420 yuan per tonne.
  • The SHFE May lead contract price rose 115 yuan to 18,600 yuan per tonne.

Currency moves and data releases

  • The dollar index was little changed at 89.53 as of 09.57am Shanghai time – the recent low being 88.94 on March 27.
  • In other commodities, the Brent crude oil spot price was up by 0.01% to $71.93 per barrel as of 09.57am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.45% to 3193.09 as of 10.55am Shanghai time.
  • In US data on Wednesday, the headline consumer price index (CPI) reading for March ticked down by 0.1%, after a 0.2% increase in February, while the core reading bumped up by 0.2% in line with expectations. Weekly crude oil inventories rose by 3.3 million barrels, against an expected 600,000-barrel decline.
  • Later today we have the European Central Bank monetary policy meeting accounts as well as US data that includes unemployment claims and import prices.
  • In addition, German Bundesbank president Jens Weidmann and Bank of England governor Mark Carney are speaking.

LME snapshot at 02.57am London time
Latest three-month LME Prices
  Price ($ per tonne)  Change since yesterday’s close ($)
Copper 6,883 -67
Aluminium 2,232.5 -17.5
Lead 2,372 -37
Zinc 3,173 -65
Tin 20,955 -45
Nickel 13,720 -145
SHFE snapshot at 09.57am Shanghai time
Most-traded SHFE contracts
  Price (yuan per tonne)  Change since yesterday’s close (yuan)
Copper  50,710 -390
Aluminium 14,275 -100
Zinc 23,865 -715
Lead 18,600 115
Tin  143,050 -1,230
Nickel  101,420 -250

Changjiang spot snapshot on April 10
  Range (yuan per tonne)  Change (yuan)
Copper  50,710 —50,730 -560
Aluminium 14,160 — 14,200 -50
Zinc 23,910 —24,910 -770
Lead 18,500 —18,700 0
Tin  143,000—144,500 -750
Nickel  101,350 —101,750 -250
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