LIVE FUTURES REPORT 22/12: SHFE copper price rises despite a weaker complex

The three-month copper price on the Shanghai Futures Exchange (SHFE) managed to rise during Asian morning trading hours on Friday December 22 amid supply concerns, despite overall weakness in the base metals complex.

The most-traded February copper contract on the SHFE stood at 54,310 yuan ($8,255) per tonne as of 10.47am Shanghai time, up 80 yuan from the previous session’s close.

The red metal continued to be well supported by supply concerns.

World mine production is estimated to have declined around 2.5% in the first nine months of the year, with concentrate production falling by 1.7% and that of solvent extraction-electrowinning product down by around 5%, the International Copper Study Group (ICSG) said on Wednesday December 20.

Chilean output experienced a 4% decline in mine production due to labor issues at Escondida at the beginning of the year and lower output from other Codelco mines. Overall production for the world’s largest copper producer fell to a six-year low, the Lisbon, Portugal-based group added.

Copper production in Peru, the other major copper miner in the world, is also likely to be subdued in the future due to political crisis.

Peru has postponed the auction of the Michiquillay copper project until February 20 because the country’s political crisis is turning companies that are interested in developing the project cautious.

“We remain positive on copper over the very short term, expecting the rebound to continue to the end of the year,” Metal Bulletin analyst Boris Mikanikrezai said.

“Our momentum-based indicators are positive, leading us to expect additional buying pressure in the days ahead. The macro remains supportive of cyclical assets, suggesting that copper is likely to continue to perform well,” he added.

Also lending support to red metal prices has been the recent relative weakness in the US dollar.

The US dollar index was at 93.41 at 10.47am Shanghai time, compared with its peak of 94.219 on December 12.

“The continuous drop in the US dollar index has driven the investors to high-profit assets [and] bullish sentiment [has] strengthened,” Citic Futures Research said.

“With the looming holidays, major trading will be driven by Asia. Copper prices are expected to be rangebound at a high level,” it added.

Other base metals lower

  • The SHFE February aluminium contract price dipped 25 yuan to 14,640 yuan per tonne.
  • The SHFE February zinc contract price was marginally up 5 yuan to 25,465 yuan per tonne at 10.47am Shanghai time before quickly retreating into negative territory.
  • The SHFE February lead contract price fell 130 yuan to 19,040 yuan per tonne
  • The SHFE January tin contract price lost 340 yuan to 137,640 yuan per tonne.
  • The SHFE May nickel contract price dropped 260 yuan to 95,480 yuan per tonne.

Currency moves and data releases

  • The dollar index was up by 0.02% at 93.41 as of 10.47am Shanghai time.
  • In other commodities, the Brent crude oil spot price rose 0.11% to $64.69 per barrel while the Texas light sweet crude oil spot price inched down 0.05% to $58.13.
  • In equities, the Shanghai Composite was up 0.09% to 3,302.88.
  • In US data out on Thursday, final third-quarter GDP came in at 3.2%, while unemployment claims stood at 245,000. The Philly Fed manufacturing index was above estimates at 26.2. Lastly, the House Price Index (HPI) October number exceeded expectations with a 0.5% reading.
  • In EU data, the December consumer confidence flash number came in line with forecasts at 0.5.
  • The economic data calendar is still busy for the last working day prior to Christmas, with US personal income and spending, new home sales, durable goods orders, the Personal Consumption Expenditures (PCE) price index, as well as UK GDP growth numbers all due out later today.
LME snapshot at 0247 London time
Latest 3M LME Prices
Price ($/t) Change since yesterday’s close ($)
Copper 7053 -33
Aluminium 2,135.5 -12.5
Lead 2,493 -12
Zinc 3,227 -15
Tin 19,375 25
Nickel 11,985 -85
SHFE snapshot at 1047 Shanghai time
Most traded SHFE contracts
Price (yuan/t) Change since yesterday’s close (yuan)
Copper 54,310 80
Aluminium 14,640 -25
Zinc 25,465 5
Lead 19,040 -130
Tin 137,640 -340
Nickel 95,480 -260

Changjiang spot snapshot on December 22
Range (yuan/t) Change (yuan)
Copper 53,940 —53,960 30
Aluminium 14,260 — 14,300 -10
Zinc 25,560 —26,360 -10
Lead 19,000 —19,200 -50
Tin 138,500—139,500 0
Nickel 95,150 —95,350 -150

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