LIVE FUTURES REPORT 24/07: SHFE base metals prices mixed; copper leads on upside

Base metals prices on the Shanghai Futures Exchange were split into two camps during morning trading on Tuesday July 24, with nickel, zinc and tin weakening, while the rest ticked higher – led by a 0.7% increase in copper.

Base metal prices benefitted somewhat from a looser monetary policy in China after the country’s central bank injected $74 billion of cash into the banking system on Monday through loans to commercial banks. The People’s Bank of China provided one-year loans through its medium-term lending facility (MLF), with rates unchanged.

The injection was the largest ever by China’s central bank using its MLF, which was created in 2014.

But a firmer dollar and simmering global trade tensions continued to keep the base metals complex under pressure this morning.

The dollar index – recently at 94.59 – had dropped as low as 94.21 on Monday, with the softer currency then supporting gains in base metals prices.

Meanwhile, copper prices outperformed its peers this morning, supported by potential supply-side disruptions amid ongoing labor negotiations between BHP and the main union at its Escondida copper mine in northern Chile.

The most-traded September copper contract on the SHFE traded at 49,370 yuan ($7,283) per tonne as at 10.06am Shanghai time, up by 350 yuan per tonne from Monday’s close.

“Unions at the Escondida copper mine said that negotiations with management had broken down and that an agreement didn’t look likely before next week’s deadline. This could see the mine suffer another strike-related disruption in a year,” ANZ Research noted on Tuesday.

Aluminium prices on the SHFE were also firmer this morning, albeit to a lesser extent, with supply concerns stemming from US sanctions on Russian producer UC Rusal providing marginal support, while a cancelation of 32,000 tonnes of the metal at London Metal Exchange warehouses across Europe on Monday also gave prices a boost.

Base metals prices

  • The SHFE September aluminium contract edged up 40 yuan per tonne to 14,285 yuan per tonne.
  • The SHFE August lead contract increased 45 yuan per tonne to 18,520 yuan per tonne.
  • The SHFE September nickel contract fell 350 yuan per tonne to 109,980 yuan per tonne.
  • The SHFE September zinc contract moved down 90 yuan per tonne to 21,385 yuan per tonne.
  • The SHFE September tin contract dropped 570 yuan to 145,250 yuan per tonne.

Currency moves and data releases

  • The dollar index was down 0.06% to 94.59 as at 10.07 am Shanghai time.
  • In equities, the Shanghai Composite was up 1.56 % to 2,904.25 as at 11.14 am Shanghai time.
  • In other commodities, Brent crude oil was down 0.15% at $72.78 per barrel.
  • In US data on Monday, existing home sales came in at 5.38 million, below the forecast of 5.46 million.
  • In data today, we have flash manufacturing purchasing managers’ indices (PMI) from France, Germany, the European Union and the United States. The US’ Richmond Manufacturing Index is also due.