LIVE FUTURES REPORT 25/09: SHFE copper, lead prices rally on declining stocks; rest of complex higher

Base metals prices on the Shanghai Futures Exchange (SHFE) were stronger across the board during the Asian morning trading session on Monday September 25, with copper and lead prices supported by a large drawdown in stocks ahead of China’s weeklong National Day holiday, which begins October 1.

The most-traded November copper contract on the SHFE traded at 50,350 yuan ($7,633) per tonne as of 03:10 BST, up 720 yuan from Friday’s close, with over 180,000 lots of the contract having changed hands so far.

Red metal prices have rallied this morning following the large drawdown in SHFE stocks seen last week.

SHFE copper stocks fell to 141,318 tonnes in the week ending September 22, down 25,429 tonnes or 15.3% on the previous week. It was also the fifth consecutive week that SHFE copper stocks have declined.

Meanwhile, London Metal Exchange copper stocks also fell on Friday, dropping a net 2,200 tonnes to 309,050 tonnes.

“Supported by a pick-up in procurement ahead of the National Day holiday in China, stocks have declined faster. Meanwhile, downstream demand for refined copper also has increased due to the restrictions [on production] amid ongoing environmental protection and quality inspections [in China],” Citic Futures Research said.

“However, market participants may be more cautious in their trading activities ahead of the upcoming holiday, which might bring downward pressure to copper prices,” it added.

Lead outperforms as stocks fall

  • Lead gave the strongest performance this morning as it rose 3.2% from its close on Friday.
  • The SHFE’s most-traded November lead contract jumped 655 yuan to 20,880 yuan per tonne.
  • SHFE lead inventories dropped 3,106 tonnes or 18.7% to 13,462 tonnes in the week ended September 22.
  • “The supply constraints will lend strong support to lead prices,” Citic Futures Research noted.
  • “Lead stocks remain at low levels, especially for warrants. In addition, the supply from local lead mines has also tightened,” it added.

Rest of complex stronger

  • The SHFE November aluminium contract price rose 65 yuan to 16,475 yuan per tonne.
  • The SHFE November zinc contract price rallied 530 yuan to 25,205 yuan per tonne.
  • The SHFE January nickel contract price rose 180 yuan to 83,990 yuan per tonne
  • The SHFE January tin contract price edged up 1,070 yuan to 145,270 yuan per tonne.

Currency moves and data releases

  • The dollar index was up 0.11% at 92.26 as of 03:10 BST.
  • In other commodities, the Brent crude oil spot price rose 0.02% to $56.77 per barrel while the Texas light sweet crude oil spot price was down 0.18% to $50.54
  • In equities, the Shanghai Composite dipped 0.36% to 3,340.57.
  • In data on Friday, US flash manufacturing PMI came in at 53.0, above the forecast of 52.9. Flash services PMI stood at 55.1, below the economic consensus of 55.8.
  • In EU data, flash manufacturing PMI was recorded higher at 58.3 from 57.4 last month while flash services PMI was also higher at 55.6 from 54.7.
  • The economic agenda is light today with German Ifo business climate, the UK’s Financial Policy Committee statement and China’s CB leading index.
  • In addition, US Federal Open Market Committee members William Dudley, Charles Evans and Neel Kashkari as well as European Central Bank president Mario Draghi are speaking.

LME snapshot at 0310 London time
Latest 3M  LME Prices
  Price ($/t)  Change since Friday’s close ($)
Copper 6,479 22
Aluminium 2,149 -9
Lead 2,496.5 13.5
Zinc 3,084.5 53.5
Tin 20,625 100
Nickel 10,530 110
SHFE snapshot at 0313 London time
Most traded SHFE contracts
  Price (yuan/t)  Change since Friday’s close (yuan)
Copper  50,350 720
Aluminium 16,475 65
Zinc 25,205 530
Lead 20,880 655
Tin  145,270 1,070
Nickel  83,990 180

Changjiang spot snapshot on September 25
  Range (yuan/t)  Change (yuan)
Copper  50,470—50,490 700
Aluminium 16,160 — 16,200 -60
Zinc 25,880—26,680 230
Lead 21,400—21,600 450
Tin  143,000—145,000 1,250
Nickel  84,600—85,600 -850
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