LIVE FUTURES REPORT 13/11: SHFE base metals prices broadly lower on stronger dollar

Base metals prices on the Shanghai Futures Exchange (SHFE) were broadly down during Asian morning trading on Tuesday November 13, pressured by a stronger US dollar, although zinc made moderate gains on falling inventories.

The US dollar index stood at 97.695 overnight, recording the highest point since June last year.

The firm US dollar was supported by the background of a strong US economy. The US unemployment rate has dropped since the beginning of 2018, with October reading sitting at 3.7%, compared with a rate of 4.1% in January.

As a result, consensus is that the US Federal Reserve will conduct an interest rate hike in December, which in return has given fresh support to the US dollar index.

Aluminium was the worst performer in Asian morning trading, amid an easing of concerns of possible supply shortages.

The most-traded aluminum January contract price on the SHFE was down 0.94% to 13,730 yuan ($1,972) per tonne as at 10:03am Shanghai time, down by 130 yuan per tonne from yesterday’s close.

Adding downward pressure on aluminum was the extension of the expiration date of general licenses relating to UC Rusal.

“Uncertainty about the US sanctions on UC Rusal continues to dominate; however, the US Department of the Treasury’s Office of Foreign Assets Control has extended the expiration date of the general licenses again, this time to January 7 from December 12,” Fastmarket analyst James Moore said.

“The softer tone has been viewed as a sign that a deal with the Russian aluminium producer is impending although concerns remain that sanctions would create significant supply disruptions,” Moore added.

Zinc was the only metal making gains this morning against a backdrop of decreasing stocks.

The most-traded zinc January contract price on the SHFE was up 0.17% to 20,965 yuan per tonne as at 10:03am Shanghai time.

Zinc stocks on the London Metal Exchange (LME) were at their lowest level since 2008, while SHFE zinc stocks decreased 16.1%, or 7,146 tonnes, over the past week to 37,378 tonnes as of November 9.

“The domestic China market has been expecting zinc refineries will cut production, and therefore the price will be under upward pressure.” Guotai Junan Futures said.

Base metals prices under pressure

  • The SHFE December copper contract fell 100 yuan to 48,850 yuan per tonne.
  • The SHFE January nickel contract edged down 140 yuan per tonne to 94,510 yuan per tonne.
  • The SHFE January zinc contract rose 35 yuan per tonne to 20,965 yuan per tonne.
  • The SHFE December lead contract lost 140 yuan per tonne to 18,465 yuan per tonne.
  • The SHFE January tin contract plummeted 200 yuan per tonne to 151,500 yuan per tonne.

Currency moves and data releases

  • The dollar index fell back 0.08% to 97.55 as of 10.21am Shanghai time.
  • In equities, the Shanghai Composite was down 0.24% to 2,624.31 at 11.18am Shanghai time.
  • No key economic data was released yesterday, and the economic calendar is also light today with only the UK unemployment rate of note.