LIVE FUTURES REPORT 23/10: SHFE base metals prices broadly down on firm dollar, trade tensions; tin, zinc buck the trend

Base metals prices on the Shanghai Futures Exchange were mostly down during Asian morning trading on Tuesday October 23 amid a firmer dollar and ongoing trade tensions, with only tin prices recording significant gains.

The dollar remains in relatively high ground which is putting downward pressure on the SHFE base metals this morning.

The dollar index stood at 96.02 as at 9.30am Shanghai time, which is up from 95.73 at roughly the same time on Monday. It is also significantly higher than the index’s recent low of 94.78, reached on October 16.

Ongoing trade tensions between China and the United States also continued to dampen market sentiment and depress prices.

“US President Trump’s economic advisor accused China of refusing to engage on trade issues. He also said it will take some time for the tariffs to have an impact, suggesting the dispute is unlikely to end any time soon,” ANZ Research said.

Concerns that a prolonged spat between the world’s two largest economies will hurt global economic growth largely wiped out the positive market sentiment inspired by a rally in Chinese equity markets on Monday.

On Monday, the benchmark Shanghai Composite Index rallied 4.1% following a rollout of supportive measures by Chinese policymakers to ease concerns about the ongoing sell-off in domestic stocks.

“China’s State Council announced overnight that it would support bond financing by private firms with central bank funding, though details were scant. The central bank also announced a higher quota for relending and rediscounting to support private sector lending,” ANZ Research added.

The stronger US currency along with sufficient domestic supply in China combined to push copper prices lower, with the metal’s most-traded December contract on the SHFE declining to 50,340 yuan ($7,252) per tonne as at 9.29am Shanghai time, down by 170 yuan per tonne from Monday’s close.

“Production at domestic refineries [in China] increased by around 20,000-30,000 tonnes this month and volumes of imported copper also flowed into the Chinese market. As a result, stocks of refined copper [in the country] have steadily increased, which is putting downward pressure on prices,” Citic Futures Research noted on Tuesday.

Chinese refined copper production totaled 764,000 tonnes in September, an increase of 10.4% year on year, while total production over January-September saw an 11.2% year-on-year rise to 6.61 million tonnes, according to data released by China’s National Bureau of Statistics on Monday.

The rest of the base metals were similarly weaker, barring tin and zinc – the latter of which is holding up surprisingly well considering the vast inflow of zinc into SHFE sheds at the end of last week.

Deliverable zinc stocks at SHFE sheds rose by 10,106 tonnes or 23.3% last week to 53,479 tonnes as of October 19.

SHFE zinc, tin prices rise, others weaken

  • The SHFE December copper contract declined by 170 yuan per tonne to 50,340 yuan per tonne.
  • The SHFE December aluminium contract dropped by 20 yuan per tonne to 14,155 yuan per tonne.
  • The SHFE December zinc contract gained 40 yuan per tonne to 22,075 yuan per tonne.
  • The SHFE January nickel contract fell by 550 yuan per tonne to 103,670 yuan per tonne.
  • The SHFE December lead contract ticked down by 65 yuan per tonne to 18,185 yuan per tonne.
  • The SHFE January tin contract increased by 890 yuan per tonne to 148,260 yuan per tonne.

Currency moves and data releases

  • The dollar index was at 96.02 as at 9.30am Shanghai time.
  • In other commodities, the Brent crude oil spot price was at $79.76 per barrel as at 9.30am Shanghai time, down 0.20% from Monday’s close.
  • In equities, the Shanghai Composite Index edged up 0.33% to 2,646.06 as at 10.15am Shanghai time.
  • There was no major data of note released on Monday.
  • The economic agenda is light today with CBI industrial order expectations from the United Kingdom, consumer confidence from the European Union and the Richmond manufacturing index from the United States.
  • In addition, Bank of England governor Mark Carney and US Federal Open Market Committee member Raphael Bostic are speaking.

London Metal Exchange, base metals prices

Shanghai Futures Exchange, base metals prices

Changjiang spot prices, base metals prices