LIVE FUTURES REPORT 21/10: SHFE base metals prices mixed; Cu up 1.2% despite fresh inflows

Base metals prices on the Shanghai Futures Exchange were mixed during the morning trading session on Monday October 21, with a rebound in the dollar exerting some downward pressure on the complex.

The US currency has recovered following a decline in the British pound after the UK parliament forced Prime Minister Boris Johnson to seek a delay to an October 31 deadline for Britain’s departure from the European Union.

“Parliament’s decision poured quelled excitement around the potential end to the Brexit saga, leaving Johnson and his government to devise a new way forward, while EU officials mull over the extension request,” Cherelle Murphy, senior analyst at ANZ Research, said in a morning note.

On Friday, the pound had been trading close to its highest level in five months against both the dollar and the euro.

“Treasury yields fell on Friday as markets hedged possible weekend event risk. The euro and GBP performed strongly as at that stage a positive Brexit resolution looked on the cards with the UK parliament vote. The dollar eased overall with the dollar index falling 0.34% to 97.27,” Jeffrey Halley, senior market analyst at online trading services provider Oanda, said in a morning note.

“That Brexit sentiment has taken a hit today, with GBP falling from a close of 1.2980 to 1.2910 this morning” Halley added.

As a result, the dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was up by 0.2% at 97.34 as at 10.26am Shanghai time.

Base metals traded on the SHFE gave a decidedly mixed performance this morning in response to the firmer dollar, with copper the best performer in terms of percentage gains.

The red metal’s most-traded December contract climbed to 47,140 yuan ($6,656) per tonne as at 10.26am Shanghai time, up by 570 yuan per tonne – or 1.2% – from Friday’s close of 46,570 yuan per tonne.

Copper participants continue to focus on supply-side issues such as force majeure declarations at MMG’s Las Bambas in Peru and Antofagasta’s Antucoya smelter in Chile last week, which is helping offset any bearishness arising from recent stock increases at SHFE-registered warehouses.

SHFE copper stocks rose by 13.3% or 17,990 tonnes to 152,499 tonnes on Friday. This follows a 13.9% jump in copper inventories in the week prior, due to high copper premiums and restocking after the Chinese Golden Week holidays.

Others highlights

  • Nickel led on the downside this morning, with its most-traded December contract falling to 125,760 yuan per tonne as at 10.26am Shanghai time, down by 3,540 yuan per tonne – or 2.7% – from Friday’s close of 129,300 yuan per tonne.
  • The Shanghai Composite Index was down by 0.14%, at 2,934.09 as at 11.18am Shanghai time.
  • In Chinese data on Friday, the country’s economy grew by 6.0% year on year in the third quarter of this year, slowing from the 6.2% growth recorded in the second quarter, according to the National Bureau of Statistics.
  • It is a quiet day for data on Monday with German producer prices and the Bundesbank monthly report of note.
  • In addition, UK Monetary Policy Committee member Andy Haldane speaking.