LIVE FUTURES REPORT 17/10: SHFE base metals prices edge upward on improving sentiment; lead weakens

“Global equities rebounded overnight, with solid earnings to kick off the season buoying sentiment. Positive developments on the Italian budget and a conciliatory tone from UK Prime Minister May also lifted the mood,” ANZ Research noted on Wednesday.

Asian markets took their cue from the strength seen in western markets overnight, with the Shanghai Composite Index climbing 0.86% to 2,568.26 as at 10.39am Shanghai time. On Tuesday, the index closed down by 0.8% or 21.77 points at 2546.33, marking its lowest close since November 2014.

Concerns that the persisting trade spat between the United States and China may affect growth in the world’s two largest economies had dampened market sentiment in recent days, causing Chinese equity markets to weaken.

“Market sentiment has improved after several days of downturn due to the recovery seen in global equity markets, which in turn has lifted futures on the SHFE,” a base metals analyst based in Shanghai said.

Providing further broad-based support was a softer dollar; the dollar index stood at 95.12 as at 10.33am Shanghai time, down from 95.58 at roughly the same time a week ago.

Gains across the SHFE base metals complex have somewhat limited however, with participants as yet lacking the confidence to chance prices higher.

The most-traded November copper contract on the SHFE stood at 50,220 yuan ($7,260) per tonne as at 10.31am Shanghai time, up just 30 yuan per tonne from Tuesday’s close. The red metal continues to contend with weak downstream demand and rising stock levels, however, which is capping any significant gains.

“Downstream smelters are not actively purchasing this month after September’s historically high volume of copper imports into China. We still maintain a cautious outlook on copper prices in the near term,” Chinese broker Guotai Junan Futures noted on Wednesday.

“Historically high copper imports in September and the closing of the import arbitrage at end of September are very likely to push Shanghai bonded copper stocks up in October,” a senior analyst based in the Chinese city of Shenzhen said.

The rest of the SHFE base metals complex saw similarly marginal gains, with the exception of lead which is giving back some of its recent gains.

Base metals prices

• The SHFE November copper contract rose by 30 yuan per tonne to 50,220 yuan per tonne.
• The SHFE December aluminium contract ticked up by 85 yuan per tonne to 14,330 yuan per tonne.
• The SHFE November zinc contract was up by 80 yuan per tonne to 22,320 yuan per tonne.
• The SHFE November lead contract dropped by 45 yuan per tonne to 18,705 yuan per tonne.
• The SHFE January nickel contract increased by 370 yuan per tonne to 102,740 yuan per tonne.
• The SHFE January tin contract was up by 340 yuan per tonne to 148,060 yuan per tonne.

Currency moves and data releases

• The dollar index was down by 0.08% to 95.152 as of 10:33 Shanghai time.
• In other commodities, Brent crude oil edged lower by 0.10% to $81.45 per barrel.
• In equities, the Shanghai Composite Index was up by 0.86% to 2,568.26 as at 10.39 am Shanghai time.
• In US data released on Tuesday, the capacity utilization rate came in unchanged at 78.1%, missing the forecast print of 78.2%, while industrial production for the September-October period was also unchanged at 0.4%, but was up from the forecast figure of 0.3%.
• JOLTS job openings for the September-October period came in at 7.14 million, up from the previous figure of 7.08 million and beating the expected 6.9 million.
• In data on Wednesday, there is a host of releases from the United Kingdom including consumer price index (CPI), producer price index (PPI) input and output, retail price index and the house price index.
• Other European data of note includes the European Union’s headline and core CPI.
• US releases of note today include building permits, housing starts and the minutes from the US Federal Open Market Committee’s (FOMC) meeting.
• In addition, FOMC member Lael Brainard, German Bundesbank president Jens Weidmann and UK Monetary Policy Committee member Ben Broadbent are speaking.