LIVE FUTURES REPORT 19/11: SHFE base metals prices all down on continued uncertainty over US-China trade talks

Base metals prices on the Shanghai Futures Exchange were all down during the morning trading session on Tuesday November 19, with uncertainty over United States-China trade negotiations continuing to weigh on the complex.

Market sentiment was subdued this morning following overnight reports that China was growing pessimistic about a trade deal due to US President Donald Trump’s reluctance to remove tariffs on Chinese goods.

“The Chinese government is concerned that Trump continues to insist publicly that he has not agreed to scrap some tariffs, despite the two sides reportedly reaching an agreement to that end earlier in the month,” Rodrigo Catril, currency strategist at National Australia Bank, said.

“It is certainly hard to make sense of the constant stream of US-China trade headlines blowing hot and cold air, that said our preference remains on putting more weight on comments coming directly from officials dealing with the trade negotiations and on this score there is nothing to contradict the view that the US and China are still working towards striking a deal,” Catril added.

As it did on Monday, nickel led the SHFE base metals lower this morning while the metal continues to contend with soft demand. The most-traded February nickel contract stood at 115,410 yuan ($16,437) per tonne as at 10.21am Shanghai time, down by 2,150 yuan per tonne – or 1.8% – from Monday’s close of 117,560 yuan per tonne.

“Signs of weak demand also weighed on the nickel market. Stainless steel prices in China fell to a two-year low amid high inventories,” analysts with ANZ Research said in a morning note.

Lead gave a similarly poor performance this morning after further significant inflows of the heavy metal into SHFE-approved sheds last week.

The most-traded January lead contract slid to 15,610 yuan per tonne as at 10.21am Shanghai time, down by 275 yuan per tonne – or 1.7% – from Monday’s close of 15,885 yuan per tonne.

Deliverable lead stocks at SHFE-listed warehouses jumped by 33% or 9,534 tonnes to 38,384 tonnes in the week to November 15, marking the third consecutive weekly increase.

“Lead stocks will continue to accumulate due to a close export arbitrage window… We had expected more short-sellers to emerge once the price fell below 16,000 yuan per tonne,” a lead analyst with investment bank Citic Securities said.

The rest of the SHFE base metals declined. January copper was down by 120 yuan per tonne at 46,860 yuan per tonne from its close on Monday at 46,980 yuan per tonne, while January aluminium was down by just 30 yuan per tonne at 13,765 yuan per tonne. January zinc fell by 140 yuan per tonne to 18,250 yuan per tonne and January tin was down by 1,160 yuan per tonne to 134,390 yuan per tonne.

Other highlights

  • The dollar index, which gauges the strength of the US currency against a basket of foreign currencies, was little changed at 97.83 as at 10.21am Shanghai time on Tuesday. This compares with a reading of 97.94 at a similar time on Monday.
  • In US data on Monday, the National Association of Home Builders’ (NAHB) housing market index came out at 70 for the October-November period, lower than expected level of 71 but still showing optimism in the US housing market.
  • In US data on Tuesday, the European Union’s current account, the United Kingdom’s Confederation of British Industry (CBI) industrial order expectations as well as US building permits and housing starts figures are due.