LIVE FUTURES REPORT 22/11: Cautious trade optimism buoys SHFE base metals prices; tin rises 0.9%

Base metals prices on the Shanghai Futures Exchange were mostly up during the morning trading session on Friday November 22 after a sense of optimism returned to the market following reports that China’s top negotiator had invited United States delegates to Beijing for face-to-face talks.

“Trade negotiations continue to dominate sentiment; however the risk seems to be in a much better place this morning after yesterday morning [with Chinese vice-premier Liu He] saying that he was ‘cautiously optimistic’ about phase 1 talks,” Stephen Innes, Asia Pacific market strategist at AxiTrader, said.

“Vice-premier He was also reported overnight to have invited the US to a new round of face-to-face talks in a phone call late last week and was hoping to meet before Thanksgiving (November 28),” Innes added.

While a meeting before November 28 seems a bit too optimistic, markets responded positively to China’s willingness to meet despite initial concerns that the passing of a controversial bill relating to Hong Kong by the US Senate earlier this week threatened a more comprehensive trade deal between the two sides.

“China is willing, on the basis of equal and mutual respect with the US, to work together to properly settle areas of common concern and strive for a phase-one trade agreement,” Gao Feng, China’s Ministry of Commerce spokesman, said separately at press conference on Thursday.

With renewed optimism pervading markets this morning, the SHFE base metals were broadly up during the morning trading session on Friday, with tin leading the charge.

The most-traded January tin contract climbed to 138,940 yuan ($19,751) per tonne as at 10.31am Shanghai time, up by 1,200 yuan per tonne – or 0.9% – from Thursday’s close of 137,740 yuan per tonne.

Tin’s standout performance follows similar strength on the London Metal Exchange on Thursday, when the metal’s three-month price closed up by 2.4% at $16,020 per tonne.

Tin’s fundamental backdrop remains supportive of higher prices.

“Global refined tin market conditions appear to have tightened since the start of the second half of the year. This is reflected in the decline of 4,330 tonnes or 29% in global exchange inventories,” Fastmarkets analyst Boris Mikanikrezai said.

In the rest of the complex, January lead edged up 30 yuan per tonne or 0.2% to 15,580 yuan per tonne, January zinc inched up 40 yuan per tonne or 0.2% at 18,100 yuan per tonne while February nickel was little changed, up by just 90 yuan per tonne to 114,100 yuan per tonne.

The others fell marginally: January copper dropped by 210 yuan per tonne or 0.5% to 46,900 yuan per tonne and January aluminium was down by 40 yuan per tonne or 0.3% to 13,825 yuan per tonne.

Other highlights

  • The dollar index, which gauges the strength of the US currency against a basket of foreign currencies, was little changed at 97.95 as at 10.31am Shanghai time.
  • The Shanghai Composite index was up by 0.3% at 2,912.12 as at 10.37am Shanghai time.
  • In data on Thursday, the European Union‘s consumer confidence was in line with expectations at -7.
  • The US’ Philly Fed Manufacturing Index was better than forecast at 10.4, compared with the expected 7.0. The Conference Board leading index was flat with analysts’ predictions at -0.1%, while existing home sales disappointed at 5.46 million units, missing the 5.49 million units forecast.
  • The economic agenda is busy on Friday with a host of flash manufacturing and services purchasing managers’ index (PMI) data out across France, Germany, the United Kingdom, the European Union and the US.
  • The revised University of Michigan consumer sentiment and inflation expectations are also due.