LIVE FUTURES REPORT 20/09: SHFE base metals stronger across the board; supply fears lift lead prices

Base metal prices on the Shanghai Futures Exchange (SHFE) were all stronger during Asian morning trading on Wednesday September 20, led higher by lead prices which have found support from supply tightness amid ongoing environmental inspections in China.

The most-traded November lead contract on the SHFE stood at 20,310 yuan ($3,084) per tonne as of 03:00 BST, up 415 yuan or 2.1% from the previous day’s close.

Continuing environmental inspections across China have exacerbated fears of supply tightness in the lead market, with a number of producers having been ordered to suspend production and undergo facility upgrades in the past two months.

“The environmental inspections have driven many miners to suspend production and undergo maintenance, which has tightened the supply of zinc and lead in the last two months,” a Shanghai-based trader said.

The strength in Asia this morning follows on from Tuesday where lead prices on the London Metal Exchange closed $30 higher at $2,420 per tonne. LME lead stocks dipped a modest 200 tonnes to 162,700 tonnes.

Likewise, follow-through strength has been seen in SHFE aluminium prices this morning.

The most-traded November aluminium price rose 160 yuan or 0.9% to 16,650 yuan per tonne, tracking the light metal’s stronger performance on the LME yesterday.

The LME three-month aluminium price was up $34.50 to $2,124 per tonne, with stocks declining a net 4,150 tonnes to 1,306,650 tonnes.

“Investors [are] becoming increasingly confident that recent curbs on Chinese [aluminium] capacity are having an impact,” ANZ Research noted.

“This has seen inventories continue to be drawn down. LME stockpiles are down 41% this year, with August levels hitting a nine-year low,” the bank added.

Other metals stronger

  • The SHFE’s most-traded January nickel contract climbed 1,530 yuan or 1.75% to 88,930 yuan per tonne.
  • A pick-up in buying activity for stainless steel products has given some lift to nickel prices.
  • “China’s domestic Norilsk full-plate premium on a yuan basis has strengthened due to steel mills’ stockpiling activities and dip buying ahead of the Chinese National Golden Week holidays,” Ellie Wang, senior nickel and ferro-chrome analyst at Metal Bulletin, said.
  • “Supply of refined nickel is still tight. Arbitrage losses have narrowed on the LME/Wuxi October contract and the LME/SHFE January contract, with a slight profit seen on September 14 and 18. Meanwhile, Shanghai-bonded nickel stocks were down 18.5% month on month and 52.5% year on year to 35,000-40,000 tonnes as of August 31, a fresh two-year low,” she added.
  • The SHFE’s most-traded November copper contract increased 60 yuan to 50,790 yuan per tonne.
  • The SHFE’s November zinc contract was little changed, up just 5 yuan to 25,430 yuan per tonne.
  • The SHFE’s most-traded January tin contract rose 390 yuan to 145,660 yuan per tonne.

Currency moves and data releases

  • The dollar index was recently down 0.14% at 91.70.
  • In other commodities, the Brent crude oil spot price was up 0.47% to $55.40 per barrel, and the Texas light sweet crude oil spot price rose 0.76% to $50.28.
  • In equities, the Shanghai Composite was down 0.14% to 3,352.04.
  • In data on Tuesday, the EU’s July current account balance showed a slightly higher surplus of €25.1 billion ($29.9 billion). In the USA, building permits in August came in at 1.3 million. Housing starts over the same period were in-line with expectations at 1.18 million.
  • Today, UK monthly retail sales are due along with a host of US data including existing home sales, crude oil inventories as well as the conclusion US Federal Open Market Committee’s September meeting with its economic projections, statement, rate decision and press conference.

LME snapshot at 0300 London time
Latest 3M  LME Prices
Price ($/t)  Change since yesterday’s close ($)
Copper 6,548.5 9.5
Aluminium 2,131.5 6.5
Lead 2,428.5 7.5
Zinc 3,093 -13.5
Tin 20,720 70
Nickel 11,210 70

SHFE snapshot at 1000 Shanghai time
Most traded SHFE contracts
Price (yuan/t)  Change since yesterday’s close (yuan)
Copper (November) 50,790 60
Aluminium(November) 16,650 160
Zinc (November) 25,430 5
Lead (November) 20,310 415
Tin (January) 145,660 390
Nickel (January) 88,930 1,530

Changjiang spot snapshot on September 20
Range (yuan/t)  Change (yuan)
Copper  50,790—50,810 -70
Aluminium 16,350—16,390 100
Zinc 25,980—26,780 -90
Lead 20,700—20,900 200
Tin  143,000—145,000 500
Nickel  88,900—89,400 600
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