LIVE FUTURES REPORT 19/12: SHFE base metals prices largely up following PBOC liquidity injection; Cu down 0.1%

Base metals prices on the Shanghai Futures Exchange were mostly in positive territory at the end of the morning trading session on Thursday December 19, with the complex buoyed by news earlier today that China’s central bank had injected another round of cash into the country’s financial system.

The People’s Bank of China (PBOC) on Thursday injected 30 billion yuan ($4.3 billion) into the market via seven-day reverse repos (RRs) at an interest rate of 2.5%, and 250 billion yuan via 14-day RRs at an interest rate of 2.65%.

Also providing broad-based support to the complex was a weaker dollar. The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was down by 0.09% at 97.34 as at 11.37am Shanghai time. This compares with a low of 97.40 on Wednesday.

In regards to the base metals, lead was the outperformer of the SHFE complex. The heavy metal’s most-traded February contract rose by 105 yuan per tonne – or 0.7% – to 15,060 yuan per tonne at the close of the morning trading session compared with Wednesday’s close of 14,955 yuan per tonne.

Aluminium registered more marginal gains over the morning session, but was buoyed by a recovery in China’s auto sector last month and low exchange stocks. The February aluminium contract rose by 25 yuan per tonne to 14,125 yuan per tonne at the end of the morning trading session on Thursday.

China produced a total of 2.593 million automobiles in November, an increase of 3.8% year on year, according to data released by the China Association of Automobile Manufacturers (CAAM) earlier this week. Auto sales disappointed, however, with total sales volumes in November falling by 3.6% year on year and 0.5% month on month to 2.457 million units.

“According to the latest data from the China Association of Automobile Manufacturers, the country’s automobile production and sales continued to recover in November, although the improvement was relatively small,” Fastmarkets aluminium analyst Cao Yang said.

Meanwhile, aluminium stocks at SHFE-listed sheds totaled 218,367 tonnes on December 13, down from 747,012 tonnes on March 1. But steady inflows of the light metal into London Metal Exchange-registered warehouses this week have tempered the bullishness over the volumes currently held the by SHFE.

LME aluminium stocks have risen by 8% since the start of the week to total 1,487,775 tonnes as of Wednesday.

Elsewhere, copper was the lone metal to end the morning session in negative territory, with data signaling rising supply in China weighing on the red metal. The February copper contract fell by 50 yuan per tonne to 49,020 yuan per tonne at the close of the morning session.

“Copper prices suffered after data showed another strong rise in Chinese output. Volumes hit 909,000 tonnes in November, exceeding the previous all-time high set in October, according to [National Bureau of Statistics] data,” Adelaide Timbrell, analyst with ANZ Research, said in a morning note.

Other highlights

  • The Shanghai Composite Index was down by 0.2% at 3,010.86 as at 11.30 am Shanghai time.
  • There is a host of data out on Thursday including the United Kingdom’s retail sales, the Bank of England’s bank rate vote and policy summary and releases from the United States that include the Philly Fed Manufacturing Index, current account, unemployment claims, the Conference Board leading index and existing home sales.