LIVE FUTURES REPORT 12/06: SHFE base metals prices mostly down, copper leads decline

Copper prices on the Shanghai Futures Exchange weakened during Asian morning trading on Tuesday June 12, with a firmer dollar and easing supply concerns weighing on investors’ appetite for the red metal.

The most-traded August copper contract price on the SHFE dropped to 53,830 yuan ($8,407) per tonne as at 10.28am Shanghai time, down 330 yuan per tonne from Monday’s close.

Falling 0.6% so far in the morning session, red metal prices have come under pressure from a stronger dollar and easing supply-side concerns, which offset declines in exchange inventory levels.

The US dollar index rose steadily overnight and reached a high of 93.90 earlier this morning. This compares with the recent low of 93.21 on June 7.

“A stronger USD and easing concerns about supply disruptions saw industrials ease lower at the start of the week. This saw copper prices tumble, after rising strongly over the past couple of weeks,” ANZ Research noted on Tuesday.

On the supply side, expectations of a resolution being reached in labor negotiations at Escondida, the world’s largest copper mine, have dented investors’ appetite for the red metal.

“Copper continues to struggle on reports of Escondida saying over the weekend that it expects to resolve its labor negotiations successfully. Prices had run up for much of last week on expectations that the negotiations would run into difficulties, but we were skeptical about this market view given that the talks had barely started,” Edward Meir, analyst at INTL FCStone said.

Meanwhile, copper stocks at SHFE and London Metal Exchange warehouses continue to slide, with SHFE inventories falling 16,224 tonnes to 256,030 tonnes as at June 8, while LME copper stocks fell 7,575 tonnes to 299,500 tonnes on Monday.

“In general, the falling stocks support copper prices. However, global trade tensions and the likelihood of an interest hike in China is likely to cap the copper rally seen last week,” Guotai Junan Futures said.

Aluminium prices, little changed with a slight upside bias, were the most resilient of the SHFE base metals complex during the morning trading session on Tuesday. The light metal has been supported by declining stock levels, but weak raw material prices are likely to put a cap on any significant gains.

The SHFE August aluminium contract price edged up 10 yuan per tonne to 14,925 yuan per tonne as at 10.28am Shanghai time.

Aluminium stocks at SHFE-listed warehouses fell 5,883 tonnes to 966,824 tonnes as at June 8.

“Falling stocks are supporting light metal prices, however, raw materials prices are under pressure,” Citic Futures Research said.

Metal Bulletin assessed Chinese alumina prices at 2,800-2,900 yuan per tonne on June 7, down from 2,900-3,000 yuan per tonne a week earlier.

Base metals prices

  • The SHFE August zinc contract price slid 65 yuan per tonne to 24,380 yuan per tonne.
  • The SHFE August lead contract price dipped 35 yuan per tonne to 20,510 yuan per tonne
  • The SHFE September tin contract price fell 330 yuan per tonne to 151,810 yuan per tonne.
  • The SHFE September nickel contract price declined 950 yuan per tonne to 114,830 yuan per tonne.

Currency moves and data releases

  • The dollar index was up 0.08% at 93.74 as at 10.35am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up 0.2% to $76.5 per barrel as at 10.35am Shanghai time.
  • In equities, the Shanghai Composite was up by 0.14% to 3057.15 as at 11.13am Shanghai time.
  • In data on Monday, Italian industrial production for April declined by 1.2% compared with the prior month, against an expected 0.7% decline. UK manufacturing production fell 1.4% in March and its total UK trade deficit widened by £1.9 billion ($2.4 billion) to £9.7 billion in the three months to April 2018.
  • Data out today includes UK labor market indicators, German ZEW economic sentiment and the United States’ core and headline consumer price indices (CPI).

LME snapshot at 3.35am London time
Latest three-month LME Prices
($ per tonne)
 Change since Monday’s close ($)
Copper 7,221 -34
Aluminium 2,313 12
Lead 2,482 7
Zinc 3,186 -15
Tin 21,030 -145
Nickel 15,235 -55
SHFE snapshot at 10.28am Shanghai time
Most-traded SHFE contracts
  Price (yuan per tonne)  Change since Monday’s close (yuan)
Copper  53,830 -330
Aluminium 14,925 10
Zinc 24,380 -65
Lead 20,510 -35
Tin  151,810 -330
Nickel  114,830 -950

Changjiang spot snapshot on June 12
  Range (yuan per tonne)  Change (yuan)
Copper  53,440 — 53,460 -400
Aluminium 14,730 —  14,770 20
Zinc 24,720 —25,720 -90
Lead 20,650 —20,850 -50
Tin  149,000—151,000 -500
Nickel  115,550 —115,750 -1,250
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