LIVE FUTURES REPORT 15/08: SHFE base metal prices broadly down amid global recession concerns, weak risk appetite; lead down nearly 1%

Base metals prices on the Shanghai Futures Exchange were broadly down during morning trading on Thursday August 15, with weak economic data releases on Wednesday fueling anxiety among investors and dampening risk-on sentiment.

In data on Wednesday, China’s industrial production growth slowed to 4.8% year on year in July, below the forecast 6.0% and the previous 6.3%, recording the weakest growth since February 2002 and reigniting fears of a global recession.

Concerns over the global economy escalated further on Wednesday when data showed Germany’s economy shrank in the second quarter of the year, with the country’s gross domestic product contracting by 0.1% in the three months ended June compared with the prior quarter.

Base metals prices on the SHFE have largely fallen in response to the increased levels of risk aversion, with lead giving the worst performance of its peers.

The most-traded September lead contract fell to 16,560 yuan ($2,356) per tonne as at 11.30am Shanghai time, down by 155 yuan per tonne, or 0.93%, from Wednesday’s close of 16,715 yuan per tonne.

“A weakening economic backdrop saw a risk-off tone hit the market. This saw economic sensitive commodities markets come under pressure.” John Bromhead, foreign exchange strategist at ANZ Research, said in a morning note.

“Heavy selling hit the industrial metals sector as weak economic data raised concerns about demand. Risk appetite suffered a hit after growth in industrial output in China fell well below expectations.” Bromhead added.

Other highlights

  • Aluminium was the lone metal in positive territory this morning, with the light metal’s most-traded October contract rising to 14,250 yuan per tonne as at 11.30am Shanghai time, up by 75 yuan per tonne or 0.5% from the previous day’s close.
  • In data on Wednesday, year-to-date fixed asset investment in China showed a year-on-year rise of 5.7%, lower than the forecast 5.9% and the previous 5.8%.
  • The United Kingdom’s consumer price index (CPI) on a year-on-year basis for the July-August period was better than expected at 2.1%, while its producer price index (PPI) input over the same period was also better at 0.9%.
  • In data on Thursday, the United States’ retail sales, Philadelphia Fed Manufacturing Index, Empire State Manufacturing Index, capacity utilization rate and industrial production are of note.
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