LIVE FUTURES REPORT 23/07: SHFE base metals prices edge up on softer dollar; nickel dips

Base metals prices on the Shanghai Futures Exchange were broadly up during morning trading on Monday July 23, with the complex drawing support from a weaker dollar following US President Donald Trump’s criticism of global monetary policy and the Federal Reserve at the end of last week.

In a tweet last Friday, President Trump said that “China, the European Union and others have been manipulating their currencies and interest rates lower.”

This coupled with US interest rate rises was making the United States lose its competitive edge as the dollar strengthened, he added.

“Tightening now hurts all that we have done. The US should be allowed to recapture what was lost due to illegal currency manipulation,” Trump said in a separate tweet.

The dollar slumped in response to Trump’s comments with the index recently at 94.27 on Monday morning, down from as high as 95.29 last Friday and 95.66 on July 19, which was the highest since July 2017.

Stock declines across most of the SHFE base metals last week were also supportive to prices this morning. All of the base metals, bar lead, saw their stock levels decline in the week ended July 20.

Aluminium led on the upside with the light metal’s most-traded September contract on the SHFE trading at 14,235 yuan ($2,099) per tonne as 9.53am Shanghai time, up 180 yuan per tonne or 1.3% from last Friday’s close.

Aluminium stocks declined by 6,107 tonnes last week to stand at 911,548 tonnes as of last Friday.

Copper had a similarly strong performance this morning following a healthy decline in stock levels last week, while supply-side issues also provided red metal prices with a boost.

Labor talks at the world’s largest copper mine, Escondida, have frozen without signs of progress toward an agreement being struck, according to the union representing workers at the mine. The existing labor contract is set to expire at the end of July.

Last year, workers at Escondida initiated a strike that lasted 44 days, resulting in surging copper prices and BHP-owned Minera Escondida Ltd suffering a loss of $184 million.

Base metals prices

  • The SHFE September copper contract rose by 220 yuan per tonne to 48,810 yuan per tonne.
  • The SHFE September zinc contract strengthened by 80 yuan per tonne to 21,320 yuan per tonne.
  • The SHFE August lead contract moved up by 95 yuan per tonne to 18,905 yuan per tonne.
  • The SHFE September tin contract increased by 220 yuan per tonne to 145,580 yuan per tonne.
  • The SHFE September nickel contract dipped by 250 yuan per tonne to 109,630 yuan per tonne.

Currency moves and data releases

  • The dollar index was down 0.22% to 94.27 as at 9.49 am Shanghai time.
  • In equities, the Shanghai Composite was down 0.04 % to 2,830.38 as at 11.10 am Shanghai time.
  • In data today, there is a German Bundesbank monthly report, consumer confidence from the European Union and US existing home sales of note.
  • In addition, Bank of England deputy governor Ben Broadbent is speaking.