LIVE FUTURES REPORT 25/04: SHFE lead gains 1.2% on strong fundamentals, US-China trade optimism

US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to China on April 30 to resume trade negotiations, according to a statement issued by the White House.

This will be followed by a Chinese delegation, led by Chinese Vice Premier Liu He, that will travel to Washington for continued talks starting May 8.

The upcoming trade talks have sparked hopes of an imminent trade deal between the United States and China, boosting sentiment across commodities markets, including those for the base metals, on Thursday.

The positive sentiment was enough to buoy SHFE base metals prices, with the complex exhibiting broad-based strength. Tin was an exception to the firmer showing and was the only base metal to register a drop in prices this morning.

Meanwhile, lead has given the best performance of the SHFE base metals so far on Thursday; the most-traded June lead contract on the SHFE rose to 16,545 yuan ($2,461) per tonne as at 9.56am Shanghai time, up by 1.2% or 200 yuan per tonne from Wednesday’s close of 16,345 yuan per tonne.

“The fundamentals in the refined lead market are set to remain supportive in 2019, with the refined lead market recording a 25,500-tonne deficit in January, according to the International Lead & Zinc Study Group (ILZSG), Fastmarkets analyst James Moore said.

“The ILZSG expects the market to record a further 17,000-tonne deficit in 2019, adding to the 98,000-tonne deficit recorded in 2018,” he added.

Meanwhile, London Metal Exchange lead stocks continue to drop. They totaled 75,050 tonnes on April 24, down from 79,425 tonnes on March 25, and strong spreads are limiting inflows.

In China, Shanghai Futures Exchange stocks totaled 33,381 tonnes on April 19, up from 28,427 tonnes on March 8, which points to rising utilization rates among Chinese smelters.

But stocks could come under pressure in the short term, with several smelters in China scheduled to conduct maintenance in early to mid-May.

Other highlights

• The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was at another 2019 high of 98.06 as at 9.56am Shanghai time, up from Wednesday’s high of 97.78. But the firmer US currency has not had a significant impact on the base metals as yet.
• As mentioned earlier, only tin prices recorded a loss this morning; the metal’s most-traded May contract falling 0.5% or 770 yuan per tonne to 145,300 yuan as at 9.56am Shanghai time.
• The Shanghai composite index dipped by 0.3% to 3,190.61 as at 10.19 am Shanghai time.
• Data of note scheduled for Thursday includes durable goods orders and unemployment claims from the US.