LIVE FUTURES REPORT 14/03: Weak dollar, healthy Chinese data underpin SHFE base metals prices

Tin was the only metal to weaken so far this morning, while the rest of complex pushed higher.

The most-traded May copper contract on the SHFE stood at 52,180 yuan ($8,248) per tonne as of 10.58am Shanghai time, up by 0.8% or 440 yuan per tonne compared with Tuesday’s close.

The base metals are benefiting from a continued weakness in the dollar.

The dollar has steadily declined this week with the index recently at 89.61, this compares with a reading of 89.93 at roughly the same time on Tuesday and down from a high of 90.37 on March 9.

“Industrials were stronger, with the weaker USD helping investor appetites in the base metals sector. Positive fundamentals also helped support the sector,” ANZ Research said on Wednesday.

Support for copper prices is being seen in an uptick in Chinese demand as well as a potential tightening of global supply amid a wave of labor negotiations taking place at several of the world’s leading mines this year and China’s clampdown on copper scrap imports.

“Evidence suggests that Chinese demand for copper has picked up recently. Physical premiums have firmed, with end-users looking to restock their inventories and traders wanting to secure material for financing activities,” Metal Bulletin analyst Boris Mikanikrezai said.

On the macroeconomic front, better-than-expected releases from China this morning has boosted sentiment for the base metals – see data section below.

Other metals higher; tin bucks trend

• The SHFE May aluminium contract rose by 95 yuan to 13,955 yuan per tonne.
• The SHFE May lead contract price increased by 230 yuan to 18,350 yuan per tonne.
• “Lead rose sharply, after data showed a spike in cancelled warrants (orders to withdraw inventory from exchange warehouses),” ANZ Research said.
• The SHFE May zinc contract rose by 85 yuan to 25,215 yuan per tonne.
• The SHFE May tin contract fell by 430 yuan to 145,730 yuan per tonne.
• The SHFE July nickel contract was up by 920 yuan to 104,830 yuan per tonnne

Currency moves and data releases

• The dollar index was down by 0.11% at 89.61 as of 11.17am Shanghai time.
• In other commodities, the Brent crude oil spot price was up by 0.11% to $64.66 per barrel as of 11.34am Shanghai time.
• In equities, the Shanghai Composite was down by 0.59% to 3,290.72 as of 11.30am Shanghai time.
• In data on Tuesday, the United States’ consumer price index (CPI) rise by 0.2% in February, in line with economists’ expectations.
• The economic agenda is busy today with data out already showing China’s industrial production grew 7.2% year on year in January-February 2018, a full percentage point above the forecast reading. The country’s fixed asset investment was similarly strong, rising by 7.9% in January-February compared with a year ago, surpassing expected growth of 7%.
• Meanwhile, Chinese retail sales for the first two months of the year grew at a slightly slower rate than expected, with growth of 9.7% during the period, against a forecast increase of 9.9%.
• Later, we have EU quarterly employment change and monthly industrial production of note as well as a raft of major US data releases including retail sales, the producer price index (PPI) and crude oil inventories.