LIVE FUTURES REPORT 22/11: Supply concerns continue to push SHFE copper prices higher

Copper prices on the Shanghai Futures Exchange continued to run higher during Asian morning trading on Wednesday November 22 amid concerns of supply disruptions after workers at Southern Copper Corp’s mines in Peru went on strike yesterday.

The SHFE’s most-traded January copper contract stood at 54,020 yuan ($8,144) per tonne as of 11:35am London time, up 590 yuan from the previous session’s close.

“Copper was stronger, after workers at Southern Copper mines in Peru began a strike. This has seen all operations halt production as discussions continue between the union and management,” ANZ Research noted on Wednesday.

Concerns about supply disruptions were heightened after reports that Freeport-McMoRan’s Indonesian unit had temporarily closed the main access road to its Grasberg mine for the second time in three days on November 14 after a shooting incident.

The red metal was also buoyed by the news that the global refined copper market had logged a 50,000-tonne deficit through August, primarily due to weak supply growth from major producer nations such as Chile, according to the International Copper Study Group.

“We are optimistic on copper over the very short term, comforted by the recent rebound in prices,” Metal Bulletin analyst Boris Mikanikrezai said.

“We expect buying on the dips to continue, supporting the uptrend in prices. In this context, we expect another fresh 2017 high in LME copper by the end of the year,” Mikanikrezai added.

London Metal Exchange copper stocks continued to decline on Tuesday, with inventories falling a net 7,025 tonnes to 234,475 tonnes.

Zinc leads the complex higher; aluminium, tin dip

  • The SHFE January zinc contract price rallied 500 yuan or 2% to 25,660 yuan per tonne, leading the gains across the SHFE base metals complex.
  • “According to data from the International Lead and Zinc Study Group (ILZSG), the global lead and zinc markets were clearly under supplied in the first three quarters of the year,” Commerzbank said.
  • “The ILZSG expects high supply deficits on both markets this year, which are set to decrease by roughly half in 2018,” it added.
  • The SHFE January lead contract price rose 180 yuan to 18,855 yuan per tonne.
  • The SHFE May nickel contract price rose 1,500 yuan to 95,770 yuan per tonne.
  • “Nickel…higher, after Glencore said it’s seeing the best market conditions for the metal in at least a decade. It predicts the market will be in a 170,000-tonne deficit in 2017, which will drive stockpiles down further,” ANZ Research said.
  • Further support for nickel prices came from reports suggesting Philippine President Rodrigo Duterte is keeping a ban on new open-cast mines in place, according to Sucden Financial Research.
  • The SHFE January tin contract price edged 280 yuan lower to 142,660 yuan per tonne.
  • The SHFE January aluminium contract price dipped 30 yuan to 14,880 yuan per tonne.

Currency moves and data releases

  • The dollar index was unchanged at 93.94 as of 11:39am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.46% to $63.03 per barrel, and the Texas light sweet crude oil spot price increased by 1.19% to $57.72.
  • In equities, the Shanghai Composite was up by 0.5% to 3,427.66.
  • In data today, we have the United Kingdom’s autumn forecast statement, the European Union’s consumer confidence and a raft of US data including core durable goods orders, unemployment claims, revised University of Michigan consumer sentiment and inflation expectations and crude oil inventories.
  • In addition, the minutes from the US Federal Open Market Committee’s (FOMC) November meeting are due later.
LME snapshot at 0235am London time
Latest three-month LME Prices
Price
($ per tonne)
Change since yesterday’s close
($)
Copper 6,913 4
Aluminium 2,092 10
Lead 2,480 1
Zinc 3,228 38
Tin 19,415 135
Nickel 11,780 -90
SHFE snapshot at 1036am Shanghai time
Most-traded SHFE contracts
Price
(yuan per tonne)
Change since yesterday’s close
(yuan)
Copper 54,020 590
Aluminium 14,880 -30
Zinc 25,660 500
Lead 18,855 180
Tin 142,660 -280
Nickel 95,770 1,500

Changjiang spot snapshot on November 22
Range (yuan/t) Change (yuan)
Copper 53,790—53,830 610
Aluminium 14,750—14,790 -100
Zinc 25,970—26,770 470
Lead 18,750—18,950 200
Tin 142,000—143,500 -500
Nickel 94,650—94,950 650
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