LIVE FUTURES REPORT 24/10: SHFE base metals prices up across the board; tin buoyed by supply concerns

The dollar index weakened to 95.93 as 11.43am Shanghai time, down from the two-month high of 96.16 reached on Tuesday.

The softness in the US currency has led to a pickup in appetite for the base metals among investors, with prices on the SHFE rising across the board this morning – though gains have been somewhat limited in most metals.

Providing further support to the complex was news that Chinese officials have begun to take steps to ease liquidity issues and stabilize equity markets with local authorities in the Shanghai region pumping funds into private companies – news which has also seen the Shanghai Composite Index climb 1.5% so far this morning.

“This seems to have triggered the Chinese metals buyers who have been standing aside back into action and this morning all the metals have rallied in the Asian session,” Malcolm Freeman of Kingdom Futures said on Wednesday.

Zinc prices were up the most on the SHFE during Asian morning trading, ignoring data showing further rises in Chinese output, with the metal’s most-traded December contract rising to 22,220 yuan ($3,201) per tonne as at 9.50am Shanghai time, up by 330 yuan per tonne from Tuesday’s close.

“[China’s] refined zinc output climbed from its lowest levels in more than four years to 456,000 tonnes in September,” ANZ Research noted.

Tin and aluminium, meanwhile, were also higher while both continued to benefit from supply-side concerns, with the latter supported by expectations of a decline in tin shipments from Indonesia following the suspension of one of the country’s key smelter inspectors.

“While the recent developments in Indonesia have somewhat raised supply risks, we think that there is presently sufficient supply in the market to prevent an immediate sharp reaction in tin prices and premiums. That said, supply/demand dynamics suggest that the refined tin market has gradually tightened this year, which should underpin a stronger tin price in the months ahead,” Fastmarkets analyst Boris Mikanikrezai said.

The rest of the complex recorded more moderate gains with investors likely to be adopting a cautious approach to trading today ahead of some key data releases in the United States, which could have some bearing on the strength of the dollar and in turn on base metals prices.

Base metals prices

• The SHFE January nickel contract rose 680 yuan per tonne to 103,400 yuan per tonne.
• The SHFE December zinc contract ticked up 330 yuan per tonne to 22,220 yuan per tonne.
• The SHFE December lead contract was up 45 yuan per tonne to 18,170 yuan per tonne.
• The SHFE January tin contract increased 420 yuan per tonne to 148,090 yuan per tonne.
• The SHFE December copper contract edged up 70 yuan per tonne to 50,130 yuan per tonne.
• The SHFE December aluminium contract moved up 45 yuan per tonne to 14,245 yuan per tonne.

Currency moves and data releases

• The dollar index was flat at 95.93 as at 11.43am Shanghai time.
• In other commodities, Brent crude oil was up by 0.34% at $76.49 per barrel.
• In equities, the Shanghai Composite Index was at 2,626.64 as at 11.24am Shanghai time.
• In European data on Tuesday, the United Kingdom’s CBI industrial order expectations for September-October came in at -6, below both the previous and expected figure of -1. The European Union’s consumer confidence for the same period was in line with expectations at -3.
• In data today, there is a host of flash manufacturing and services purchasing managers’ index (PMI) releases out across Europe and the US.
• Other US data of note today includes new home sales, crude oil inventories and the beige book.