LIVE FUTURES REPORT 13/02: SHFE base metals prices little changed to lower despite positive trade developments, softer dollar

Base metals prices on the Shanghai Futures Exchange were mostly down during Asian morning trading on Wednesday February 13, with investors remaining cautious despite some positive trade developments and a softer dollar.

With the exception of aluminium, which was little changed with a slightly upward bias, the SHFE base metals were all lower on Wednesday morning. This despite the dollar weakening significantly overnight.

The dollar index, at 96.65 at as 11.18am Shanghai time, is down from a two-month high of 97.20 reached on Tuesday after investors began to take profits following an eight-day rally in the US currency.

“With a tentative deal averting a US government shutdown reached and positive noise from the ongoing US-China trade talks, Wall Street surged more than 1.5% higher overnight, the US JOLTS job opening also posted much higher-than-expected gain to USD 7.335 million, adding fuel to the fire,” Jeffrey Halley, senior market analyst from foreign exchange company Oanda, said in a morning note.

“The positive backdrop saw investors rotating out of the USD bringing its eight-day rally to an end,” Halley added.

Adding to the positive sentiment across markets was encouraging headlines on the trade negotiations between China and the United States, with US President Donald Trump saying overnight that “If we’re close to a deal where we think we can make a real deal and it’s going to get done, I could see myself letting that slide for a little while,” speaking of the looming March 1 deadline when US tariffs on $200 billion of Chinese imports increase to 25% from 10%.

Yet despite this, investors seem to be holding back from getting overly eager before US-China trade talks officially get underway in Beijing on Thursday and this caution is putting the base metals under pressure, a senior macroeconomic analyst based in Shanghai told Fastmarkets MB.

Nickel prices on the SHFE fell for a second consecutive day, reversing the strong gains witnessed on Monday after iron ore futures prices on the Dalian Commodity Exchange surged.

The most-traded May nickel contract on the SHFE stood at 98,550 yuan ($14,535) per tonne as at 10.44am Shanghai time, up by 0.6% or 630 yuan per tonne from Tuesday’s close. The contact had reached a high of 101,950 yuan per tonne on Monday, tracking a jump in the most-traded May iron ore contract on the DCE to a three-month high on the same day.

The weaker tone in iron ore prices comes as market participants question whether a 17% price increase since January 25 is an overreaction to the news that Brazilian producer Vale SA will suspend operations at several of its mines.

Tin, zinc, lead and copper were also weaker this morning, while aluminum was little changed.

“Inventory accumulated around the Lunar New Year holidays, while domestic spot aluminum trading remains inactive with the majority of downstream plants not yet resuming operations due to lackluster demand,” Chinese broker Guotai Junan said in a morning note.

Base metals prices

  • The SHFE March copper contract price dipped by 30 yuan per tonne to 48,080 yuan per tonne.
  • The SHFE March aluminium contract price edged up by 10 yuan per tonne to 13,375 yuan per tonne.
  • The SHFE March zinc contract price decreased by 150 yuan per tonne to 21,470 yuan per tonne.
  • The SHFE March lead contract price was down by 130 yuan per tonne to 16,670 yuan per tonne.
  • The SHFE May tin contract price declined by 1,780 yuan per tonne to 148,100 yuan per tonne.
  • The SHFE May nickel contract price decreased by 630 yuan per tonne to 98,550 yuan per tonne.

Currency moves and data releases

  • The dollar index was down by 0.07% at 96.65 as at 11:18am Shanghai time.
  • Shanghai Composite index closed Wednesday’s morning trading session at 2697.11, up by 0.94%.
  • In data on Tuesday, US job openings increased by 169,000 to a seasonally adjusted 7.3 million in December 2018, according to the Labor Department’s monthly Job Openings and Labor Turnover Survey. That is the highest level since the series started in 2000.
  • In data on Wednesday, there is the United Kingdom’s consumer price index (CPI), producer price index input and output, retail price index and house price index, while industrial production from the European Union is also scheduled.
  • US releases also out later include CPI and weekly crude oil inventories.

London Metal Exchange, base metals prices

Shanghai Futures Exchange, base metals prices

Changjiang spot prices, base metals prices