LIVE FUTURES REPORT 14/12: Most SHFE base metals prices higher on weaker dollar, except lead

Base metals prices on the Shanghai Futures Exchange were broadly higher during Asian morning trading on Thursday December 14, underpinned by weakness in the dollar, while lead was the sole metal in negative territory.

The most-traded February copper contract on the SHFE stood at 52,620 yuan ($7,948) per tonne as of 10.30am Shanghai time, up by 270 yuan from the previous day’s close.

The base metals have been broadly supported by weakness in the dollar this morning after the US Federal Reserve delivered a much-expected interest rate rise on Wednesday but flagged concerns about inflation in its accompanying statement.

The US central bank raised interest rates by a quarter of a percentage point on Wednesday to a target range of 1.25-1.50% but the policy tightening was accompanied by concerns about low inflation, toning down expectations for policy tightening in 2018, with officials sticking to a projection of three increases next year. The Fed forecast inflation to remain shy of its goal for another year, giving policymakers little reason to accelerate the expected pace of rate increases.

In response, the dollar index fell to a one-week low of 93.37 on Wednesday.

The index was down by 0.03% at 93.38 as of 10.46am Shanghai time, but earlier in the session had fallen as low as 93.33 – its lowest since December 6.

In copper, expectations of supply disruptions and tightened supply have also lent support to prices.

“Despite signs of slowing Chinese demand, any disruption to supply could rapidly tighten market conditions and draw the metal above $7,000 per tonne [on the London Metal Exchange] ,” John Meyer of SP Angel said.

“Investors were also induced to cover some bearish trades as the outlook for further supply disruptions darkened. With prices pushing higher, the likelihood of strike action in Chile is increasing. Next year, nearly three quarters of the country’s supply is susceptible to strike action as wage contracts expire,” ANZ Research said on Thursday.

Indeed, workers at Teck Resources Ltd’s Quebrada Blanca copper mine in Chile are preparing to go on strike after their contract expired at the end of November and negotiations failed to produce a deal.

Although the company maintains that operations will continue and that any labor action will not impact overall production.

Rest of complex higher, except lead

  • The SHFE May nickel contract price rose by 510 yuan to 90,330 yuan per tonne.
  • The SHFE February zinc contract price was 35 yuan higher at 25,225 yuan per tonne.
  • The SHFE February aluminium contract price inched up by 65 yuan to 14,315 yuan per tonne.
  • The SHFE January tin contract price increased by 780 yuan to 134,900 yuan per tonne.
  • The SHFE January lead contract price was down by 65 yuan to 19,205 yuan per tonne.

Currency moves and data releases

  • The index was down by 0.03% at 93.38 as of 10.46am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.07% to $62.81 per barrel, while the Texas light sweet crude oil spot price decreased by 0.02% to $56.75.
  • In equities, the Shanghai Composite was down by 0.27% to 3,294.18.
  • In US data on Wednesday, the November consumer price index (CPI) was in line with expectations at 0.4% while the core reading dipped to 0.1%, against both an expected and previous reading of 0.2%. Crude oil inventories showed a larger-than-expected drawdown of 5.1 million barrels – a decline of 3.6 million barrels had been called for.
  • Today, we have a host of flash manufacturing and services purchasing managers’ index (PMI) data out across Europe and the United States, UK monthly retail sales, the Bank of England’s monetary policy summary and official bank rate as well as the European Central Bank’s (ECB) minimum bid rate. Other US data of note includes monthly retail sales, monthly import prices and unemployment claims.
  • In addition, there is an ECB press conference throughout the day.

LME snapshot at 02.29am London time
Latest three-month LME Prices
($ per tonne)
 Change since yesterday’s close ($)
Copper 6,757 28
Aluminium 2,027 18
Lead 2,520 -5
Zinc 3,170 17
Tin 19,000 200
Nickel 11,300 205
SHFE snapshot at 10.30am Shanghai time
Most-traded SHFE contracts
(yuan per tonne)
 Change since yesterday’s close (yuan)
Copper  52,620 270
Aluminium 14,315 65
Zinc 25,225 35
Lead 19,205 -65
Tin  134,900 780
Nickel  90,330 510
Changjiang spot snapshot on December 14
(yuan per tonne)
 Change (yuan)
Copper  52,460—52,480 440
Aluminium 13,970—14,010 50
Zinc 25,530—26,330 80
Lead 19,050—19,250 0
Tin  136,000—137,000 -250
Nickel  90,550—90,750 650
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