LIVE FUTURES REPORT 14/02: SHFE base metals prices up across the board; eyes on US-China trade talks

Providing the base metals with a boost this morning was the earlier release of better-than-expected Chinese data, which showed the country’s trade surplus stood at $39.2 billion in January – surpassing the forecast figure of $33.5 billion but down from $57.1 billion in December 2018.

In terms of shipments, China’s exports on a dollar-denominated basis rose by 9.1% in January from a year earlier, beating the expected decrease of 3.3%, official data showed. Imports fell by 1.5% year on year in the same comparison, which was better than the expected 10% fall and the 7.6% drop recorded in December 2018.

Copper prices were buoyed by the better-than-expected trade data and began to strengthen following its release. Having been little changed to weaker earlier in the session, the most-traded SHFE copper contract ticked up to 48,150 yuan ($7,119) per tonne as at 11.24am Shanghai time, up by 0.1% or 30 yuan per tonne from Wednesday’s close.

The rest of the complex were also up, with gains ranging between 0.3% and 0.6%.

“The better-than-expected data eased concerns over Chinese demand and are providing some support to base metals prices on the SHFE,” a Shanghai-based analyst told Fastmarkets MB.

The base metals are also benefitting from optimism surrounding positive trade headlines, but there is still a degree of caution in the market while participants wait for concrete developments in high-level trade talks which began on Thursday.

“Easing trade tension helped support the base metals sector, with copper inching higher. US President Trump said that trade talks were making good progress, easing concerns of further headwinds for economic growth. Senior US representatives are now in China for high level talks with their counterparts, raising hope of a deal before the 1 March deadline,” David Plank, head of Australian economics at ANZ, said in a morning note.

Yet the dollar also benefited from the positive trade developments, with the dollar index moving back above the 97 mark. At 97.12 as at 10.55am Shanghai time, the index is hovering near a two-month high of 97.20 reached on Tuesday.

The stronger US currency is putting downward pressure on the base metals, which is putting a cap on any gains made by the SHFE complex.

Base metals prices

• The SHFE March copper contract price edged up by 30 yuan per tonne to 48,150 yuan per tonne.
• The SHFE March aluminium contract price moved up by 35 yuan per tonne to 13,385 yuan per tonne.
• The SHFE March zinc contract price increased by 75 yuan per tonne to 21,515 yuan per tonne.
• The SHFE March lead contract price was up by 85 yuan per tonne to 16,795 yuan per tonne.
• The SHFE May tin contract price rose by 830 yuan per tonne to 148,770 yuan per tonne.
• The SHFE May nickel contract price ticked up by 370 yuan per tonne to 98,720 yuan per tonne.

Currency moves and data releases

• The dollar index stood at 97.12 as at 10.55am Shanghai time, this compares with a reading of 96.65 at roughly the same time on Wednesday.
• Shanghai Composite index closed Thursday’s morning trading session at 2,712.43, down by 0.32%.
• In European data on Wednesday, the United Kingdom’s headline consumer price index (CPI) fell to a two-year low of 1.8% in January, down from 2.1% in the prior month. The core CPI for the same period was 1.9%, flat with both the forecast and previous readings.
• The UK’s producer price index (PPI) input fell by 0.1% month on month in January, versus an expected 0.2% gain. The UK’s retail price index (RPI) and house price index (HPI) both rose by 2.5% in 2018, down from gains of 2.7% in the prior year.
• In US data on Wednesday, consumer prices were unchanged for a third consecutive month in January, leading to the slowest annual increase in inflation since June 2017. In the twelve months through January, the headline CPI rose by 1.6%.
• US weekly crude oil inventories increased by more than expected in the week ended February 8 with a gain of 3.6 million barrels to 450.8 million barrels.
• In data on Thursday, there is Germany’s preliminary gross domestic product (GDP) and wholesale price index, the European Union’s flash GDP and flash employment change, while US releases include core retail sales, PPI, unemployment claims and natural gas storage.