LIVE FUTURES REPORT 13/06: SHFE base metals prices all down after disappointing China data

Base metals traded on Shanghai Futures Exchange were all down during Asian morning trading on Wednesday June 13, with zinc, aluminium and tin prices dropping over 1%, following weaker-than-expected economic data from China overnight.

The most-traded August aluminium contract price on the SHFE dropped to 14,720 yuan ($2,298) per tonne as at 11.14am Shanghai time, down 170 yuan per tonne or 1.1% from Tuesday’s close.

China’s total social financing growth, a broad measure of credit and liquidity in the economy, declined to 760.8 billion yuan in May, less than half of the gain recorded in the preceding month. It was also the lowest reading in 22 months.

“Social financing plummeted in May, which indicates that the entire economy will continue to face capital pressure,” Guotai Junan Futures said on Wednesday.

The news reignited fears of a possible slowdown in the world’s second-largest economy due to country’s monetary tightening measures, which have been employed to curb credit risk.

Aluminium prices have come under additional pressure from weakening raw materials prices and rising production volumes in China.

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. Prices had been as high as 3,100-3,200 yuan per tonne on April 26.

After winter capacity cuts came to an end in the middle of March, Chinese aluminium production rose quickly with April seeing a total of 2.77 million tonnes of aluminium produced, an increase of 1.1% year on year, according to the country’s Bureau of Statistics.

In the first four months of 2018, China produced a total of 10.89 million tonnes of primary aluminium, up 0.2% from same period last year.

This combined with the weakness in raw materials prices was enough to offset the positive sentiment derived from declines in aluminium stocks at SHFE and London Metal Exchange warehouses.

SHFE aluminium stocks fell 5,883 tonnes to 966,824 tonnes as of June 8, while inventories on the LME dipped by 6,325 tonnes to 1,162,650 tonnes on Tuesday.

SHFE zinc prices also fell during Asian morning trading on Tuesday, with large inflows from bonded warehouses significantly easing concerns of supply tightness in the Chinese domestic market. Meanwhile, sluggish demand in the spot market also weighed on prices.

The SHFE August zinc contract price declined 340 yuan per tonne to 24,210 yuan per tonne as at 11.14am Shanghai time

Zinc stocks in Shanghai-bonded warehouses dropped to 206,000-207,000 tonnes at the end of May, compared with 214,000-215,000 tonnes a month ago, according to Metal Bulletin’s assessment.

The decline reflected an opening of the import arbitrage window since May 23, which allowed importers to achieve a better profit on selling imported metal into China, market sources told Metal Bulletin.

“Zinc ingots from bonded warehouses have been flowing into domestic market quickly,” Citic Futures Research noted.

“Spot demand has been weak, which may subdue the zinc price rally seen in previous weeks,” Guotai Junan Futures said.

Base metals prices

  • The SHFE August copper contract price dropped 440 yuan per tonne to 53,530 yuan per tonne
  • The SHFE July lead contract price dipped 115 yuan yuan per tonne to 20,465 yuan per tonne
  • The SHFE September tin contract price fell 2,070 yuan per tonne to 149,800 yuan per tonne.
  • The SHFE September nickel contract price declined 420 yuan per tonne to 114,750 yuan per tonne.

Currency moves and data releases

  • The dollar index was up 0.05% at 93.88 as at 11.21am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up 0.25% to $75.6 per barrel as at 11.21am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.67% to 3059.36 as at 11.22 Shanghai time.
  • In US data on Tuesday, the core consumer price index (CPI) rose marginally in May, with a 0.2% increase, but bettered an expected increase of 0.1%.
  • The economic agenda is busy today with a host of UK data including CPI, producer price index (PPI), house price index and the retail price index. US data of note includes the headline and core PPI, crude oil inventories, the US Federal Open Market Committee’s rate decision, statement and press conference.

LME snapshot at 3.25am London time
Latest three-month LME Prices
($ per tonne)
 Change since Tuesday’s close ($)
Copper 7,195 -27
Aluminium 2,289 -13
Lead 2,477 2
Zinc 3,184.50 -14.5
Tin 20,910 -215
Nickel 15,250 40
SHFE snapshot at 11.14am Shanghai time
Most-traded SHFE contracts
(yuan per tonne)
 Change since Tuesday’s close (yuan)
Copper  53,530 -440
Aluminium 14,720 -170
Zinc 24,210 -340
Lead 20,465 -115
Tin  149,800 -2,070
Nickel  114,750 -420

Changjiang spot snapshot on June 13
(yuan per tonne)
 Change (yuan)
Copper  53,270 — 53,290 -170
Aluminium 14,520 —  14,560 -270
Zinc 24,580 —25,580 -140
Lead 20,600 —20,800 -50
Tin  148,000—150,000 -1,000
Nickel  115,800 —115,900 200