LIVE FUTURES REPORT 17/05: Weaker dollar gives SHFE base metals prices a boost; copper rises on short-covering

Base metals prices on the Shanghai Futures Exchange were up across the board during Asian morning trading on Thursday May 17 after the dollar weakened, with copper seeing additional support from short-covering.

The most-active July copper contract on the SHFE traded at 51,180 yuan ($8,029) per tonne as at 11.23am Shanghai time, up 160 yuan per tonne from Wednesday’s close. Around 120,000 lots of the contract have changed hands so far this morning.

Copper prices had weakened earlier this week to as low as 50,690 yuan per tonne on Tuesday amid concerns over rising stock levels. On Thursday, investors closed their short positions to take profit on the contract which saw open interest for the contract fall to 214,748 positions at as 10.56am Shanghai time, from 215,988 positions at Wednesday’s close.

The macroeconomic environment is stable, but the rise in domestic copper stock levels could apply downward pressure on copper prices, Guotai Junan Futures said in a note on Thursday.

Copper inventories in SHFE warehouses rose for a second consecutive week in the week ended May 11, reaching a total of 279,525 tonnes. Stocks in London Metal Exchange warehouses had risen consecutively over Monday and Tuesday, but saw a slight 525-tonne net decline to 290,825 tonnes on Wednesday.

In news, Polish copper producer KGHM was reported to have said on Tuesday that it has temporarily closed its Sierra Gorda copper mine in Chile following a fatal accident.

“With copper production of 101,700 tonnes last year and accounting for only 1.85% of Chile’s total production, the impact of the shutdown should be limited,” China’s Ruida Futures said late on Wednesday.

Meanwhile, the dollar index has eased after hitting as high as 93.64 on Wednesday, the highest since December 19, 2017. It was at 93.17 as at 11.22am Shanghai time, down 0.13% from its previous closing price.

US industrial production data provided further evidence that activity is expanding at a stronger pace in the second quarter, ANZ Research said on Thursday.

US data suggests that the US Federal Reserve is “locked and loaded” for a June rate rise, the bank said.

“However, we think it will pause after that until December, but the three or four hike debate for 2018 will continue to run,” it added.

Base metals prices

  • The SHFE July aluminium contract price increased 120 yuan per tonne to 14,910 yuan per tonne.
  • The SHFE June lead contract price rose 40 yuan per tonne to 19,450 yuan per tonne.
  • The SHFE July zinc contract price gained 60 yuan per tonne to 23,840 yuan per tonne.
  • The SHFE September tin contract price edged up 490 yuan per tonne to 146,200 yuan per tonne.
  • The SHFE July nickel contract price jumped 350 yuan per tonne to 108,090 yuan per tonne.

Currency moves and data releases

  • The US dollar index was at 93.17 as at 11.22am Shanghai time, down 0.13% from its previous closing price. The index has eased after hitting as high as 93.64 on Wednesday, the highest since December 19, 2017.
  • In other commodities, the Brent crude oil spot price rose 0.1% to $79.37 per barrel as at 11.21am Shanghai.
  • In equities, the Shanghai Composite fell 0.4% to 3,156.92 as at 11.20 am Shanghai time.
  • In US April data released on Wednesday, industrial production grew close to expectations at 0.7%, while building permits were in line with forecasts at 1.35 million. Capacity utilization rate at 78% and housing starts at 1.29 million were, however, somewhat lower than their projections. Weekly crude oil inventories fell 1.4 million barrels, close to the forecast of a 1.1-million decline.
  • US data due later today includes the Philly Fed Manufacturing Index, unemployment claims and CB Leading Index.

SHFE snapshot at 11.23 am Shanghai time
Most-traded SHFE contracts
  Price (yuan per tonne) Change since previous session’s close (yuan)
Copper (Jul) 51,180 160
Aluminium (Jul) 14,910 120
Zinc (Jul) 23,840 60
Lead (Jun) 19,450 40
Tin  (Sep) 146,200 490
Nickel  (Jul) 108,090 350

LME snapshot at London time
Latest three-month LME Prices
  Price ($ per tonne) Change since previous session’s close ($)
Copper 6,861.50 35.5
Aluminium 2,334 18.5
Lead 2,348.50 7.5
Zinc 3,091.50 17
Tin 20,815 90
Nickel 14,550 75

Changjiang spot snapshot on May 17
  Range (yuan per tonne) Change (yuan)
Copper  50,960-51,000 230
Aluminium 14,730-14,770 100
Zinc 24,040-24,090 50
Lead 19,350-19,550 50
Tin  144,000-145,500 0
Nickel  107,900-108,000 850
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