LIVE FUTURES REPORT 13/01: SHFE base metals prices subdued; Al slumps 1.2%, Ni rises 1%

With the exception of aluminium and nickel, base metals prices on the Shanghai Futures Exchange were little changed at the close of morning trading on Monday January 13.

The complex exhibited mixed but limited movements this morning while reacting to underwhelming December employment data out of the United States at the end of last week.

Data out on Friday showed that non-farm payrolls increased by 145,000 last month, a touch weaker than the expected 160,000. But job growth in the preceding two months was also revised downward, with the increase in November lowered to 256,000 from 266,000 and the rise in October dropped to 152,000 from 156,000.

The US unemployment rate held steady at 3.5% in December as expected, but average hourly earnings rose by just 0.1% month on month, missing an expected increase of 0.3% over the same comparison.

Despite the softer-than-expected readings, market analysts expect the impact on commodity markets to be limited.

“The detail on the US jobs numbers are mostly weak but probably not enough to impact policy. It could mean a slightly weaker dollar and is a short-term positive for treasuries. It is not a disastrous print, and looking at the six-month moving average of 188,000, suggests the report is a bit of a shrug, if not a Goldilocks payrolls,” Stephen Innes, chief Asia market strategist at Axitrader, said in a note.

Indeed, with tensions between the US and Iran continuing to de-escalate, market participants seem more concerned with the signing of a “phase one” trade deal between the US and China, which is scheduled for Wednesday.

The initial deal comes after nearly 18 months of a simmering trade war between the world’s two largest economies.

“It’s unlikely there will be an exceptional level of excitement in the market as the agreement has been extensively telegraphed… Provided the deal inks a commitment from China to increase agricultural products and outlines a dependable enforcement mechanism, the market will go merrily along the way,” Innes added.

As a result, the SHFE base metals were mixed with movements mostly limited at the close of Monday’s morning trading session. There were two exceptions to this, however.

Aluminium gave the worst performances of its peers, with the light metal’s most-traded March contract sliding to 13,945 yuan ($2,015) per tonne, down by 165 yuan per tonne – or 1.2% – from Friday’s close of 14,110 yuan per tonne.

Losses were also seen in March copper, which fell by 0.2% to 48,910 yuan per tonne, and March zinc, which declined by 0.3% to 18,285 yuan per tonne.

Nickel was the outperformer of the SHFE base metals this morning with a 1% gain to 113,060 yuan per tonne, while March lead inched up by 0.1% to 14,995 yuan per tonne. June tin was little changed at 137,560 yuan per tonne.

Other highlights

  • The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was little changed at 97.34 as at 11.30am Shanghai time, against a reading of 97.41 at a similar time on Friday.
  • In data expected today, the United Kingdom will release figures on its gross domestic product, manufacturing production, construction output, goods trade balance and industrial production.