LIVE FUTURES REPORT 13/12: Firm dollar caps gains in SHFE base metals prices; market awaits FOMC statement

Zinc was the outperformer on the SHFE this morning, with its February contract rising 145 yuan or 0.6% to 25,110 yuan ($3,792) per tonne as of 10.22am Shanghai time.

Zinc prices have been supported by the news that Glencore will conduct a relatively slow restart of its zinc operations, with its overall zinc production actually expected to decline next year. Meanwhile, the global zinc market remains in deficit.

“The diversified miner said it would conduct a phased restart of Lady Loretta in 2018. However, its overall zinc production will actually decrease slightly next year, before gradually increasing through 2020. The Lady Loretta mine only represents about a third of the 500,000 tonnes a year capacity that Glencore closed two years ago,” ANZ Research said on Wednesday.

Tin was the sole metal on the SHFE in negative territory this morning while the other metals could manage only slight gains amid a firmer dollar as investors remained cautious ahead the release of the FOMC statement later today.

While central banking officials are widely expected to raise US interest rates at today’s meeting, investors will be more focused on the language used in the statement to discuss the path of future rate increases – which depending on how hawkish it is perceived to be, could send the dollar higher.

The dollar index was down by 0.17% at 93.91 as of 11.36am Shanghai time after reaching a one-month high of 94.22 on Tuesday.

Base metals prices

• The SHFE May nickel contract price rose by 260 yuan to 89,870 yuan per tonne.
• The SHFE January lead contract price increased by 45 yuan to 19,200 yuan per tonne.
• The SHFE February copper contract price was 110 yuan higher at 52,180 yuan per tonne.
• The SHFE February aluminium contract price inched up 5 yuan to 14,255 yuan per tonne.
• The SHFE January tin contract price fell 2,460 yuan or 1.8% to 134,880 yuan per tonne.

Currency moves and data releases

• The dollar index was down by 0.17% at 93.91 as of 11.36am Shanghai time – the index had reached a high of 94.22 on December 12, its highest since November 14.
• In other commodities, the Brent crude oil spot price was up by 0.22% to $63.92 per barrel, and the Texas light sweet crude oil spot price increased by 0.16% to $57.51.
• “China’s State Council approved listing the country’s long-awaited oil futures in Shanghai, a key step for the world’s largest crude buyer to launch an international contract in its own currency,” Bloomberg noted on Tuesday.
• In equities, the Shanghai Composite was down by 0.12% to 3,276.83.
• In data on Tuesday, the US NFIB small business optimism index rose to 107.5 in November, which is its highest level since 1983. Nearly half of respondents (48%) expect business conditions to improve over the next six months compared with 32% in October, while 34% expect higher sales, the highest reading since 2005.
• “The US headline producer price index rose a stronger-than-expected 0.4% month on month and 3.1% year on year in November. The core measure rose 0.3% month on month and was steady at 2.4% year on year. It points to a further firming in pipeline inflation pressures. The UK headline consumer price index (CPI) rose to 3.1% year on year, the highest rate since March 2012, boosted by airfares and computer game prices. Core inflation was unchanged,” ANZ Research noted.
• The economic agenda is busy today with UK and EU employment data of note while US data includes CPI, core CPI, crude oil inventories and the much-awaited FOMC statement.
• In addition, US President Donald Trump is speaking in Washington DC.