LIVE FUTURES REPORT 19/02: SHFE copper prices supported; others mixed on renewed dollar strength

The mixed movements come amid a strengthening US currency; the dollar index, at 96.89 as at 12.02am, has rebounded from a low of 96.65 set on Monday.

Despite the firmer dollar, continuing trade talks between the United States and China remained supportive to base metals prices – though a lack of any concrete progress being made has kept investors from becoming overly positive on a deal being struck in the near term, limited any price gains.

In copper, prices found additional support from news of a number of supply-side developments.

On Monday, plans to restart operations at Vedanta’s 400,000-tonne-per-year copper smelter in the Indian state of Tamil Nadu stalled after the Supreme Court ordered the company to restart its legal appeal via the Chennai High Court, pushing the company’s case back into the territory of state politics rather than national.

This should keep imports of the red metal into India elevated this year.

Meanwhile in Indonesia, “problems at Grasberg hit again as PT Freeport’s copper export permit expired on 15 February, and the company is yet to get a recommendation to export from the Indonesian mining ministry. This remains a supply risk and could see exports falling further in 2019.,” Richard Yetsenga, chief economist with ANZ Research, said in a morning note.

“Trucking companies in Peru, the second largest copper supplier, went on indefinite strike on Monday on rising fuel prices, taxes and road tolls,” Yetsenga added.

As a result, the most-traded April copper contract on the SHFE rose to 49,350 yuan ($7,290) per tonne as at 10.56am Shanghai time, up by 0.2% or 120 yuan per tonne from Monday’s close.

“We are constructive on our outlook for copper prices in the next three months. At the macro level, we expect conditions to prove increasingly friendly, prompting the excessively negative copper speculative positioning to correct,” Fastmarkets analyst Boris Mikanikrezai said.

“At the fundamental level, we expect Chinese refined copper demand to pick up later this month, reflecting positive seasonality post Lunar New Year,” he added.

Base metals prices

• The SHFE March aluminium edged down by 45 yuan per tonne to 13,415 yuan per tonne.
• The SHFE April zinc contract price fell by 155 yuan per tonne to 21,420 yuan per tonne.
• The SHFE March lead contract price dropped by 160 yuan per tonne to 16,805 yuan per tonne.
• The SHFE May nickel contract price rose by 520 yuan per tonne to 98,910 yuan per tonne.
• The SHFE May tin contract price was up by 710 yuan per tonne to 149,800 yuan per tonne.

Currency moves and data releases

• The dollar index was up by 0.1% to 96.89 as of 12.02am Shanghai time.
• In equities, the Shanghai Composite was up by 0.25% to 2,761.22 as at 11.30am Shanghai time.
• In data on Monday, the United Kingdom’s Rightmove house price index improved in February with a gain of 0.7% from 0.4% previously.
• In data on Tuesday, we have the average earnings index, unemployment rate and claimant count from the UK, German and EU ZEW economic sentiment and the US National Association of Home Builders housing market index of note.