LIVE FUTURES REPORT 20/11: SHFE base metals prices edge up after China hints at further monetary easing; Cu gains 0.6%

Market sentiment was somewhat upbeat this morning following overnight reports that the Chinese central bank would step up credit support to the economy and push real lending rates lower.

“Authorities will promote capital replenishment and boost banks’ ability to increase lending,” PBOC Governor Yi Gang told a meeting with representatives from commercial banks, adding that lenders should reference the Loan Prime Rate (LPR) when it comes to setting lending rates.

“Governor Yi Gang said the bank would reduce real lending rates and boost credit to encourage growth. This saw copper prices rally in the night session on the Shanghai Futures Exchange,” ANZ Research analyst Rahul Khare said in a morning note.

The red metal seemed to experience follow-through strength this morning and led its peers upward; the most-traded January copper contract soared to 47,150 yuan ($6,709) per tonne as at 10.55am Shanghai time, up by 260 yuan per tonne – or 0.6% – from Tuesday’s close of 46,890 yuan per tonne.

But gains across the rest of the complex were more subdued. January aluminium inched up by just 20 yuan per tonne to 13,760 yuan per tonne from its close on Tuesday, while January zinc edged up by 10 yuan per tonne to 18,315 yuan per tonne. January lead ticked up by 30 yuan per tonne to 15,670 yuan per tonne and January tin was up by 50 yuan per tonne to 134,900 yuan per tonne.

Nickel was the lone metal to record a loss, albeit a minor one, with the most-traded February contract dipped by 70 yuan per tonne to 115,290 yuan per tonne compared with its close on Tuesday of 115,360 yuan per tonne.

The less convincing gains in the majority of the SHFE base metals are likely the result of continued uncertainty stemming from trade negotiations between China and the United States after US President Donald Trump warned on Tuesday that if a deal is not reached, he will raise tariffs on Chinese goods even higher.

“Nevertheless, talks are still being categorized as ‘constructive’, though details on the timing of a possible deal have yet to emerge. The developments had little impact on markets, suggesting a degree of fatigue on endless trade headlines,” Tapas Strickland, economist at National Australia Bank, said in a morning note.

Other highlights

• The dollar index, which gauges the strength of the US currency against a basket of foreign currencies, was little changed at 97.88 as at 10.51am Shanghai time on Wednesday.
• The Shanghai Composite index was down by 0.4% at 2,922.96 as at 11.30am Shanghai time.
• In data on Tuesday, the European Union’s current account stood at €28.2 billion ($31.2 billion), beating the expected €22.3 billion, while US building permits came in at 1.46 million units, above the forecast 1.39 million units. US housing starts stood at 1.31 million units, below the projected 1.32 million units.
• The United Kingdom’s Confederation of British Industry (CBI) industrial order expectations were -26, better than the expected -30.
• It is a quiet day for data on Wednesday with Germany’s producer price index and the European Central Bank’s financial stability review of note.