LIVE FUTURES REPORT 21/11: Strike news pushes up SHFE copper prices; aluminium weakens

Copper prices on the Shanghai Futures Exchange rose during Asian morning trading on Tuesday November 21, boosted by expectations of possible supply disruptions due to upcoming industrial action at Peruvian copper mines.

The most-traded January copper contract on the SHFE rose to 53,340 yuan ($8,033) as of 10:45am Shanghai time, up 390 yuan from the previous session’s close.

“Southern Copper Corp [is] set to strike from midnight on November 21 and workers at Peru’s Mining Federation [are] also set to meet [on Monday] and [Tuesday] with strikes threatened,” Marex Spectron noted.

Southern Copper produced around 870,000 tonnes of copper in 2016, according to ANZ Research.

Providing further support for red metal prices was the news that the global refined copper market remained in a deficit through August.

The global refined copper market recorded a 50,000-tonne deficit through August, primarily due to weak supply growth from major producer nations like Chile, the International Copper Study Group reported on Monday.

“We remain bullish for copper’s fundamentals but these already-high prices are being met by selling. Upside progress may therefore be slow while buying has to absorb more scale-up selling,” Metal Bulletin senior analyst William Adams said.

“Copper is trading its own fundamentals with traders trying to resolve what the divergence between high exchange prices and generally quiet premiums means,” he added.

SHFE aluminium dips on underwhelming production cuts

  • The SHFE January aluminium contract fell 80 yuan to 15,050 yuan per tonne.
  • Sentiment in the aluminium market has faltered on concerns that China’s production curbs over the country’s winter period, November 15-March 15, 2018, will not live up to expectations, with prices subsequently weakening.
  • “Aluminium prices fell after reports that the production curbs over winter will not be as great as expected. Of the 1.3mtpy of capacity that China Hongqiao Group has been asked to close, nearly 400ktpy is not operational, according to industry experts,” ANZ Research said on Tuesday.
  • “The same company also said it would increase utilization rates at operational units to offset some of these closures,” the bank added.
  • “… Sentiment has been impacted as the Caixin website reported that Shandong Weiqiao is exempt from the winter pollution cutbacks, this raises some concern over the viability of general production cutbacks,” Sucden Financial said late on Monday.

Other metals higher, bar zinc

  • The SHFE May nickel price rose 600 yuan to 94,450 yuan per tonne.
  • The SHFE January tin price was up 230 yuan to 142,880 yuan per tonne.
  • The SHFE January lead edged 15 yuan higher to 18,675 yuan per tonne.
  • The SHFE January zinc contract inched down 35 yuan to 25,130 yuan per tonne.

Currency moves and data releases

  • The dollar index was down by 0.02% to 94.02 as of 11:42am Shanghai time today.
  • In other commodities, the Brent crude oil spot price was up by 0.36% to $62.29 per barrel, and the Texas light sweet crude oil spot price increased by 0.27% to $56.48.
  • In equities, the Shanghai Composite was up by 0.40% to 3,405.83.
  • In data on Monday, China’s CB leading index was in line with expectations at 1.3%, while the print from the United States climbed 1.2% in October, following a 0.1% increase in September.
  • The economic agenda is light today with mainly the United Kingdom’s public sector net borrowing, the Bank of England’s inflation report hearings and US existing home sales of note.
LME snapshot at 0245am London time
Latest three-month LME Prices
($ per tonne)
Change since yesterday’s close ($)
Copper 6,817.50 -10.5
Aluminium 2,086.50 0.5
Lead 2,456.50 -3.5
Zinc 3,159 -4
Tin 19,465 -10
Nickel 11,645 -15

SHFE snapshot at 1048am Shanghai time
Most-traded SHFE contracts
(yuan per tonne)
Change since yesterday’s close (yuan)
Copper 53,340 390
Aluminium 15,050 -80
Zinc 25,130 -35
Lead 18,675 15
Tin 142,880 230
Nickel 94,450 600
Changjiang spot snapshot on Tuesday November 21
(yuan per tonne)
Change (yuan)
Copper 53,190—53,210 260
Aluminium 14,850—14,890 -250
Zinc 25,500—26,300 -20
Lead 18,550—18,750 0
Tin 142,500—144,000 0
Nickel 94,000—94,300 750
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