LIVE FUTURES REPORT 17/09: SHFE base metals prices down amid elevated risk aversion

Base metals prices on the Shanghai Futures Exchange were down during the morning trading session on Tuesday September 17, with risk aversion still heightened following an attack on Saudi Arabian oil facilities over the weekend.

“It was a textbook risk-off response in global financial markets following the strike on Saudi Arabia’s oil facilities over the weekend. Equities dipped, petro and safe-haven currencies benefited, and treasuries and precious metals lifted,” analysts with ANZ Research said in a morning note.

Acting as another broad headwind for the SHFE base metals complex was a firmer US currency ahead of the upcoming two-day US Federal Open Market Committee (FOMC) meeting that concludes on Wednesday.

The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was little changed from its close at 98.61 as at 10.21am Shanghai time. This compares with a reading of 98.13 at roughly a similar time on Monday, however.

Previously, the market had largely priced in an interest rate cut at FOMC’s September meeting. This week, with the sharp increase in oil prices, there has been growing speculation that the US central bank may not be in such a hurry to cut rates again, a Shanghai-based analyst said.

Therefore, with the different scenarios that tomorrow’s meeting might bring, the dollar has become rangebound, the analyst added.

This uncertainty has instilled further caution in markets this morning, with SHFE base metals prices declining across the board. Lead, giving the worst performance of its peers, had its most-traded October contract drop to 16,975 yuan ($2,401) per tonne as at 10.20am Shanghai time, down by 385 yuan per tonne - or 2.2% - from Monday’s close of 17,360 yuan per tonne.

At the same time, market participants continue to digest the disappointing Chinese data released early on Monday, which is acting as a further drag on prices this morning - see below.

Other highlights

  • The Shanghai Composite index was down by 0.85% to 3,005.16 as at 11.16am Shanghai time.
  • Chinese data out on Monday disappointed, with industrial production growth slowing to its weakest pace in more than 17 years, expanding by just 4.4% year-on-year in August. Chinese retail sales for the same period similarly disappointed, with a year-on-year gain of 7.5% versus the expected 7.9% increase.
  • The United States’ Empire State manufacturing index released late on Monday came in at 2.0, below an expected 4.1.
  • Data of note on Tuesday includes German ZEW economic sentiment and US releases including capacity utilization rate, industrial production and the National Association of Home Builders housing market index.
What to read next
Fastmarkets invited feedback from the industry on the pricing methodology for cobalt hydroxide, min 30% Co, inferred, China, $lb, via an open consultation process between May 4 and June 1, 2023. This consultation was done as part of our published annual methodology review process.
Fastmarkets will discontinue its consumer buying price assessments for machine shop turnings in the Cleveland and Pittsburgh markets effective Tuesday June 6.
Fastmarkets has decided to proceed with the launch of a new European low carbon ferro-chrome price covering material with lower chrome content.
Fastmarkets invites feedback on a proposal to increase the publication frequency of non-exchange-deliverable equivalent-grade (EQ) copper cathode premium, cif Shanghai, from once every two weeks to once every week.
The outlook for North American steel scrap prices has headed further into bearish territory ahead of June’s trade, with prices for all grades expected to fall again after a round of across-the-board decreases in May
Fastmarkets is inviting feedback on a change of publishing time for our ferro-chrome price in the Chinese domestic market as well as ferro-chrome import prices in Japan and South Korea, to 5-6pm Shanghai time from 2-3pm London time.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.