LIVE FUTURES REPORT 13/06: SHFE base metals prices little changed; Cu down 0.3%

Copper and tin were down by 0.3% and 0.1% respectively while the rest were up between 0.1% for zinc and 0.9% for nickel. The divergent moves come while market participants digest trade developments and the release of some disappointing economic data from China on Wednesday.

In data on Wednesday, China’s consumer price index (CPI) and producer price index (PPI) rose by 2.7% and 0.6% respectively in May, both in line with analysts’ forecasts. The PPI was down from a prior reading of 0.9%, however, which reignited fears that a prolonged trade conflict with the United States was slowing economic growth in China.

This was followed by the release of softer-than-expected data on Chinese lending; Chinese banks extended 1.18 trillion yuan ($170.6 billion) in new loans last month, according to data from the People’s Bank of China, up from 1.02 trillion yuan in April but below the forecast 1.3 trillion yuan.

Adding to the unfavorable backdrop for the base metals was continued trade volatility, with US President Donald Trump sending mixed messages on a possible deal with China.

“Markets continued to grapple with mixed trade headlines overnight, with President Trump stating that he’s holding up a trade deal with China. This follows earlier threats to raise tariffs on China if President Xi doesn’t meet with Trump at the upcoming G20 meeting,” analysts with ANZ Research said in a morning note.

“[International Monetary Fund managing director Christine Lagarde] has called for a de-escalation of trade tensions, suggesting that subdued global growth combined with the world’s largest economies putting up, or threatening to put up, new trade barriers could have broad implications,” the analysts added.

As a result, the red metal was subdued this morning, with the most-traded July copper contract on the SHFE dropping to 46,330 yuan per tonne as at 10.43am Shanghai time, down by 150 yuan per tonne from Wednesday’s close of 46,480 yuan per tonne.

The weakness comes despite news that 3,200 workers at Codelco’s Chuquicamata copper mine in Chile plan to go on strike this week after union-management talks broke down.

Chuquicamata is the third-largest mine operated by Codelco, after El Teniente and Radomiro Tomic, and produced 321,000 tonnes of copper in 2018.

Other highlights

• The most-traded September nickel contract was the best performer amongst its peers, rising to 98,220 yuan per tonne as at 10:43 Shanghai time, up by 830 yuan from the previous close of 97,390 yuan per tonne.
• The dollar index was little changed at 96.92 as at 10.57 am Shanghai time.
• The Shanghai Composite Index was up by 0.12% at 2,912.82 as at 11.30 am Shanghai time.
• In US releases on Wednesday, the CPI rose by just 0.1% in May following a 0.3% increase in the prior month. US crude oil inventories unexpectedly rose in the week ended June 7 with a 2.2-million-barrel increase from the prior week, compared with the 1-million-barrel decline that had been forecast.
• Data of note scheduled for Thursday includes German final CPI, EU industrial production as well as US import prices and unemployment claims.