LIVE FUTURES REPORT 24/03: SHFE base metals prices up on dollar weakness; Sn rebounds 3.9%

Base metals prices on the Shanghai Futures Exchange were all up during the morning session on Tuesday March 24 amid a slide in the dollar and following the launch of unlimited quantitative easing by the United States Federal Reserve.

The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, retreated by 0.31% to 101.80 as at 11.31am Shanghai time. This compares with a reading of 102.30 at a similar time on Monday.

“The dollar is falling against most of its major trading partners after the Fed got an A+ in maximizing policy efforts to alleviate liquidity concerns, snap the dollar’s momentum and pretty much doing everything that was asked of them to support the economy,” Edward Moya, Oanda’s senior market analyst for Asia Pacific, said in a morning note.

On Monday, the Federal Reserve announced a new plan that includes purchasing unlimited quantities of Treasury bonds and mortgage-backed securities, direct purchases of corporate bonds, and direct loans to companies. The US central bank will also lend against student loans, credit card loans and government-backed loans to small businesses.

“Massive stimulus support from the Fed provided a breather after heavy sell-off in recent weeks,” Cherelle Murphy, senior economist at ANZ, said in a morning note.

The SHFE base metals were broadly up this morning amid the friendlier backdrop, with tin leading the charge higher. The most-traded June tin contract closed the morning session on Tuesday at 111,500 yuan ($15,753) per tonne, up by 3.9% or 4,140 yuan per tonne from Monday’s close of 107,360 yuan per tonne.

The May contracts for copper and lead also gave strong performances to close at 37,950 yuan tonne (+2%) and 13,465 yuan per tonne (+1.8%) respectively. May aluminium was up by 0.4% at 11,395 yuan per tonne and May zinc was up by 0.5% at 14,705 yuan per tonne.

Nickel was the laggard of the complex in terms of percentage gains, with the May nickel contract rising by 0.2% to 92,090 yuan per tonne at the close of morning trading.

The less positive performance from the alloying metal comes amid a deteriorating fundamental backdrop after Chinese customs data showed the country’s imports of nickel ore and concentrate totaled 1.38 million tonnes in February, a drop of 48.4% from January and 31.9% from February 2019.

Other highlights

  • The Shanghai Composite Index was up by 1.48% at 2,699.43 as at 11.30 am Shanghai time.
  • On Monday, EU’s consumer confidence index for the March period was recorded at -12, slightly better than the expected level of -14.
  • It is a busy day for data on Tuesday with a host of manufacturing and services purchasing managers’ index readings out across Europe and the US. CBI industrial order expectations from the United Kingdom and the US’ Richmond Manufacturing Index and new home sales are also expected.
  • In addition, there are Group of Seven (G7) meetings scheduled throughout the day.