LIVE FUTURES REPORT 26/02: Rising stocks dent SHFE copper prices; zinc buoyed by tight availability

Copper prices on the Shanghai Futures Exchange were weaker during Asian morning trading on Monday February 26, with the red metal coming under pressure following a 10% jump in copper volumes at SHFE-approved warehouses last week.

The most-traded April copper contract on the SHFE fell to 53,350 yuan ($8,420) per tonne as of 10.08am Shanghai time, down by 240 yuan per tonne from last Friday’s close.

Continual increases in copper stocks at SHFE-listed warehouses have dented sentiment for the red metal, with prices heading lower.

SHFE copper stocks rose by 20,773 tonnes to 218,532 tonnes in the short trading week to February 23, up by 10.5% from 197,759 tonnes on February 14, the last trading day before the Lunar New Year holiday (February 15-21). Volumes have risen by 36% since the beginning of the year.

The other base metals traded on the SHFE were also broadly weaker this morning amid the traditional slowdown in demand following the holiday period.

“Base metals came under pressure early in the session. The return of traders in China [on Thursday] also seemed to weigh prices. With many Chinese factories likely to remain closed for the time being, physical traders remained quiet,” ANZ Research noted.

Zinc price buoyed on tight availability

  • Zinc was the only SHFE base metal in positive territory this morning.
  • The SHFE’s April zinc contract price moved up by 40 yuan to 26,600 yuan per tonne as of 10.08am Shanghai time.
  • The continuous large outflows of zinc from London Metal Exchange warehouses – which has partially offset the rising stocks in SHFE-sheds - has lent slight support to the price of zinc.
  • LME zinc inventories declined by a net 10,675 tonnes last week.
  • Meanwhile, zinc stock levels at SHFE warehouses rose by 12,330 tonnes or 12% to 114,887 tonnes on February 23.
  • “Although China zinc stocks rose heavily before and after the Chinese New Year holiday, stock levels in China and abroad remain low compared with the same period last year,” Citic Futures Research said.
  • “Furthermore, the outlook amid the tightened availability of zinc remains strong, which will continue to lend support to prices,” it added.

Other base metals dip

  • The SHFE April aluminium contract price dipped by 75 yuan to 14,290 yuan per tonne.
  • The SHFE April lead contract price dropped by 55 yuan to 19,320 yuan per tonne.
  • The SHFE May tin contract price fell by 360 yuan to 146,950 yuan per tonne.
  • The SHFE May nickel contract price weakened by 510 yuan to 104,440 yuan per tonne.

Currency moves and data releases

  • The dollar index was down 0.09% at 89.8 as of 10.08am Shanghai time.
  • In other commodities, the Brent crude oil spot price was down 0.07% to $67.26 per barrel as of 9.51am Shanghai time.
  • In equities, the Shanghai Composite was up by 0.4% to 3302.12 as of 10.45 am Shanghai time.
  • In data last Friday, the EU’s final consumer price index came in as expected with a 1.3% year-on-year increase.
  • Today’s economic agenda is light with US new homes sales of note.
  • In addition, European Central Bank president Mario Draghi is speaking.
LME snapshot at 02.08 am London time
Latest three-month LME Prices
Price ($ per tonne) Change since Friday’s close ($)
Copper 7,127.50 32.5
Aluminium 2,155 15
Lead 2,550 19
Zinc 3,516.50 13.5
Tin 21,545 -105
Nickel 13,740 -25
SHFE snapshot at 10.08 am Shanghai time
Most-traded SHFE contracts
Price (yuan per tonne) Change since Friday’s close (yuan)
Copper 53,350 -240
Aluminium 14,290 -75
Zinc 26,600 40
Lead 19,320 -55
Tin 146,950 -360
Nickel 104,440 -510

Changjiang spot snapshot on February 26
Range (yuan per tonne) Change (yuan)
Copper 52,940 —53,960 -120
Aluminium 13,890 — 13,930 -40
Zinc 26,530 —27,330 0
Lead 19,300 —19,500 0
Tin 146,000—147,500 -500
Nickel 103,500 —103,800 -500
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