LIVE FUTURES REPORT 18/02: SHFE base metals prices all up on renewed optimism

“Positive signs in the US-China trade talks helped boost sentiment across markets, with base metals benefiting in particular,” Kishti Sen, international economist at Australia and New Zealand Banking Group (ANZ), said in a morning note.

“China Central Television reported that China had reached consensus in principle on the main topics with the US. President Trump said on Friday that a trade deal with China is a lot closer and that he might extend the date [on a sharp rise in punitive tariffs on Chinese imports] to allow a deal to be reached. Sentiment in the metals markets was also boosted by data showing China’s credit growth exceeded expectations in January,” Sen added.

China’s new yuan-denominated loans totaled 3.23 trillion yuan ($477 billion) in January, up by 328.4 billion yuan year on year, according to the People’s Bank of China (PBOC). The amount of new loans more than doubled from 1.08 trillion yuan in December last year.

The country’s M2, a broad measure of money supply that covers cash in circulation and deposited in banks, increased by 8.4% year on year to 186.59 trillion yuan at the end of January, PBOC said.

A weaker US currency added to the more risk-friendly tone in the market; the dollar index stood at 96.72 as at 11.32am Shanghai time, once more retreating below the 97 mark. At a similar time last Friday, the index had been at 97.06.

Against a more positive backdrop in the market, the base metals traded on the SHFE have had a strong start to the week.

In copper, the most-traded April contract on the SHFE climbed to 48,700 yuan per tonne as at 10.41am Shanghai time, up by 1% or 500 yuan per tonne from last Friday’s close.

The rest of the complex were likewise stronger.

Base metals prices

• The SHFE March zinc contract price rose by 200 yuan per tonne to 21,600 yuan per tonne.
• The SHFE May nickel contract price surged by 1,070 yuan per tonne to 97,720 yuan per tonne.
• The SHFE March aluminium edged up by 55 yuan to 13,440 yuan per tonne.
• The SHFE March lead contract price climbed by 95 yuan per tonne to 16,965 yuan per tonne.
• The SHFE May tin contract price was up by 510 yuan per tonne to 148,810 yuan per tonne.

Currency moves and data releases

• The dollar index was down by 0.18% to 96.72 as at 11.32am Shanghai time.
• In equities, the Shanghai Composite was up by 1.79% to 2,730.27 as at 11.30am Shanghai time.
• In US data last Friday, the Empire State manufacturing index, at 8.8 in February, was better than the forecast reading of 7.1, while import prices fell more than expected with a 0.5% decline in January, surpassing the forecast 0.1% fall.
• The capacity utilization rate shrank to 78.2% in January from 78.8% a month earlier, while industrial production registered a larger-than-expected decline of 0.6% last month – forecasts had been for a flat reading.
• The University of Michigan’s preliminary consumer sentiment reading rose to 95.5 in February from 91.2 in the prior month.
• In data on Monday, there is the Rightmove house price index from the United Kingdom and a German Bundesband monthly report of note.
• US markets are closed on Monday to mark Presidents’ Day.
• Looking ahead to the rest of the week, the release of the minutes from the US Federal Open Market Committee’s (FOMC) January meeting. The release is expected to be closely eyed by market participants who will be looking for further details on the FOMC’s stance toward further interest rate increases.