LIVE FUTURES REPORT 22/03: SHFE base metals prices broadly higher on weaker dollar following FOMC meeting

Base metal prices on the Shanghai Futures Exchange were broadly higher during Asian morning trading on Thursday March 22, with support coming from a weaker dollar following Wednesday’s US Federal Reserve meeting.

The most-traded May copper contract on the SHFE was at 51,110 yuan ($8,075) per tonne as of 11.20am Shanghai time, up by 530 yuan per tonne from Wednesday’s closing price, with around 252,000 lots of the contract traded.

The US Federal Open Market Committee (FOMC) lifted the Federal funds rate by 25 basis points to 1.5-1.75% as expected on Wednesday, but the dollar came under pressure from the FOMC’s slightly dovish tone - the committee did not suggest it was leaning towards four rate hikes this year, but kept its rate path unchanged at three for 2018, while also keeping its inflation forecast unchanged. The FOMC did however upgrade its benchmark rate projection to 2.9% for 2019.

“As rising interest rate expectations were subtly shifted into 2019, the dollar naturally had to fall,” John Browning, managing director at Bands Financial, said.

“So why, ever so slightly, were rate rise expectations being pushed into next year? In public, clearly [FOMC chairman] Jerome [Powell] remains optimistic for the economy and has followed [former FOMC chairman Janet] Yellen’s policy and signaled two more rate hikes in 2018, but one may sense that Jerome can see darker clouds are on the far horizon.”

US durable goods data had slumped in January and anything less than the forecast growth of at least 1% for the February data due on Friday should prompt questions as to the consensus around the strength of the US economy, Browning added.

Meanwhile, copper market participants continue to monitor labor negotiations at Antofagasta’s Los Pelambres copper mine. The main union at the mine had agreed to extend government-led mediation by five days, postponing a potential strike there.

“Any sign that an agreement can be reached without disruption to output could be bearish for the copper price,” ANZ Research said.

Rest of complex higher; aluminum slightly lower

  • The SHFE May aluminium contract slipped 5 yuan to 13,930 yuan per tonne.
  • The SHFE May zinc contract gained 355 yuan to 24,760 yuan per tonne.
  • The SHFE May lead contract price increased 300 yuan to 18,655 yuan per tonne.
  • The SHFE July nickel contract rose 460 yuan 101,940 yuan per tonne.
  • The SHFE May tin contract price jumped 1,300 yuan to 144,620 yuan per tonne.

Currency moves and data releases

  • The dollar index fell 0.1% to 89.57 as of 11.30am Shanghai time. The index had reached as low as 89.48 earlier today, the lowest since March 8.
  • In other commodities, the Brent crude oil spot price fell 0.24% to $69.44 per barrel as of 11.31am Shanghai time.
  • In equities, the Shanghai Composite dipped 0.81% to 3,254.31 as of 11.30am Shanghai time.
  • In US data released on Wednesday, February existing home sales were at 5.54 million, higher than the forecast of 5.41 million, while weekly crude oil inventories fell 2.6 million barrels, against expectations of a 2.6-million-barrel increase.
  • A string of US economic data is due later today, including unemployment claims, house price index and flash services and manufacturing purchasing managers’ indices.
SHFE snapshot at 11.20am Shanghai time
Most-traded SHFE contracts
Price (yuan per tonne) Change since previous session’s close (yuan)
Copper (May) 51,110 530
Aluminium (May) 13,930 -5
Zinc (May) 24,760 355
Lead (May) 18,655 300
Tin (May) 144,620 1,300
Nickel (Jul) 101,940 460

LME snapshot at 03.20am London time
Latest three-month LME Prices
Price ($ per tonne) Change since previous session’s close ($)
Copper 6,814 21
Aluminium 2,097 16
Lead 2,401.50 1.5
Zinc 3,248.50 -0.5
Tin 20,895 -105
Nickel 13,495 35

Changjiang spot snapshot on March 22
Range (yuan per tonne) Change (yuan)
Copper 50,900-50, 20 370
Aluminium 13,720-13,760 30
Zinc 24,850-25,650 350
Lead 18,650-18,850 250
Tin 144,000-145,000 250
Nickel 101,500-102,000 600
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