LIVE FUTURES REPORT 21/09: SHFE base metals prices broadly up on weak dollar, easing trade tensions; zinc, lead buck the trend
Base metals prices on the Shanghai Futures Exchange were broadly up during Asian morning trading on Friday September 21, with the complex supported by fresh buying amid a weaker dollar and easing trade tensions between the United States and China.
The most-traded November copper contract price on the SHFE rose to 49,520 yuan ($7,228) per tonne as at 10.12am Shanghai time, up by 180 yuan per tonne from Thursday’s close.
A weaker US currency provided broad support to the SHFE base metals this morning; the dollar index stood at 93.91 as at 10.13am Shanghai time, compared with 94.48 at roughly the same time on Thursday. Overnight, the index had dropped as low as 93.80, its lowest point since early July.
In addition, greater positivity in the market stemming from a perceived easing of global trade tensions this week continues to give base metals prices some lift.
“China is reportedly planning to cut tariffs on a number of imports from most of its trading partners from as early as October. This is a move that should not only prop up Chinese domestic consumption (in the face of rising import prices) but could also offset some of the negative global demand impacts of the US-led trade friction,” ANZ Research noted on Friday.
This comes after general relief in the market that fresh tariffs in the tit-for-tat trade war between the US and China announced earlier this week were not as damaging as had been expected.
On Monday, US President Donald Trump’s administration announced it would impose a 10% tariff on $200 billion of imports from China effective September 24, with the tariffs increasing to 25% from next year unless a deal can be reached between the two nations. The market viewed this as less damaging than an immediate 25% tariff.
In response, the Chinese government said it plans to impose new tariffs – at 5% and 10% – on $60 billion worth of US goods. These tariffs are less than Beijing had first threatened when it put forward a list in August listing duties of up to 25%.
Nickel prices performed strongly this morning against a backdrop of falling exchange inventories, with a 0.9% increase compared with Thursday’s close.
“Total [London Metal Exchange nickel] stocks have more or less stabilized near the 2018 low of 232,098 tonnes due to the slower pace of outflows in recent weeks. There is still a sizeable 52,464 tonnes of metals assigned for removal and the persistent drawdowns in exchange inventory continue to suggest healthy physical demand for the metal,” Metal Bulletin analyst Andy Farida said.
At 16,863 tonnes on September 14, nickel stocks at SHFE-approved warehouses are down by 65.5% from the 48,920 tonnes recorded at the start of the year.
Aluminium gave a similarly strong performance this morning, with the metal’s most-traded contract also up by 0.9%.
“Some high-cost capacity is closing down in September. At the same time, spot activity has improved as the stabilizing of aluminium prices encouraged consumers to build up stocks ahead of China’s National Day holidays (October 1-7),” Citic Futures Research said.
Base metals prices
- The SHFE November nickel contract rose 970 yuan per tonne to 103,880 yuan per tonne.
- The SHFE November aluminium contract gained 130 yuan per tonne to 14,705 yuan per tonne.
- The SHFE January tin contract climbed 1,060 yuan per tonne to 147,130 yuan per tonne.
- The SHFE November zinc contract fell 135 yuan per tonne to 21,585 yuan per tonne.
- The SHFE November lead contract slid 245 yuan per tonne to 18,225 yuan per tonne.
Currency moves and data releases
- The dollar index was up by 0.01% at 93.91 as at 10.13am Shanghai time.
- In other commodities, the Brent crude oil spot price was at $78.64 per barrel as at 10.13am Shanghai time, flat with yesterday’s close.
- In equities, the Shanghai Composite was down by 0.09% at 2,726.85 as at 10.48am Shanghai time.
- In US data on Thursday, jobless claims fell to 201,000, compared with 204,000 in the previous month; the Philadelphia Fed business outlook survey rebounded to 22.9 from 11.9; existing home sales were unchanged at 5.34 million.
- In data on Friday, there is a host of services and manufacturing purchasing managers’ index (PMI) releases out across Europe and the US. Other data of note includes the United Kingdom’s public sector net borrowing and a Bank of England quarterly bulletin.