LIVE FUTURES REPORT 26/03: Copper leads the SHFE base metals complex lower amid escalating China-US trade tensions

Base metals prices, with the exception of tin, on the Shanghai Futures Exchange were all lower during Asian morning trading on Monday March 26 after the escalating trade tensions between China and the United States weighed on the demand outlook for commodities.

Copper prices led on the downside with the most-traded may copper contract on the SHFE falling to 49,310 yuan ($7,808) per tonne as of 10.19am Shanghai time, down by 800 yuan or 1.6% from last Friday’s close.

Escalating tensions between the US and China has sparked a wave of selling and nervousness across the base metals complex.

“The action [of President Donald Trump signing off on import tariffs for Chinese products on March 22] from the White House unnerved the US stock market. The sell-off triggered a wave of liquidation in a number of commodity markets… base metals lost significant ground,” INTL FCStone analyst Ed Meir said last Friday.

“For the time being, trade headlines will dominate sentiment at the expense of almost everything else. Let’s hope cooler heads prevail and that the politicians don’t push the global economy into the ditch,” he added.

On Friday, China responded to Trump’s Section 232 tariffs on steel and aluminium imports by announcing plans to impose tariffs on approximately $3 billion worth of US-origin goods, including seamless steel pipes and aluminium scrap.

“China’s response only strengthened the view that global economic growth could be affected by this escalation in trade tension,” ANZ Research said in its morning note.

In energy markets, China launched its first crude oil futures contract on the Shanghai International Energy Exchange on Monday, giving the world’s largest oil importer – China imports 67% of the oil it consumes – its overdue say in the pricing of crude oil.

The yuan-denominated contracts, which will be open to both domestic and foreign investors, will give the Shanghai International Energy Exchange a share of the global oil futures trading that is measured in trillions of dollars.

Base metals prices

  • The SHFE July nickel fell by 1,230 yuan or 1.3% to 97,290 yuan per tonne.
  • The SHFE May aluminium contract was down by 65 yuan to 13,700 yuan.
  • The SHFE May zinc dipped by 100 yuan to 24,570 yuan per tonne.
  • The SHFE May lead edged down by 20 yuan to 18,415 yuan per tonne.
  • The SHFE May tin price rose by 390 yuan to 141,870 yuan per tonne.

Currency moves and data releases

  • The dollar index was down by 0.09% at 89.38 as of 11.23am Shanghai time.
  • In other commodities, the Brent crude oil spot price increased by 0.05% to $70.30 per barrel, and the Texas light sweet crude oil spot price was down by 0.17% to $65.61.
  • In equities, the Shanghai Composite was down by 1.61% to 3,102.11 as of 11.26am Shanghai time.
  • In US data on Friday, core durable goods orders were at 1.2% month on month, while durable goods ordered were recorded at 3.1%. US new home sales were recorded at 618,000 – just below the forecast.
  • The economic agenda is light today with speeches from German Bundesbank President Jens Weidmann and US Federal Open Market Committee members William Dudley, Loretta Mester and Randal Quarles of note.

LME snapshot at 03.18am London time
Latest three-month LME Prices
  Price ($ per tonne)  Change since yesterday’s close ($)
Copper 6,593.50 -66.5
Aluminium 2,054.50 4
Lead 2,349 8
Zinc 3,202 -15
Tin 20,750 -25
Nickel 12,935 -15
SHFE snapshot at 10.19am London time
Most-traded SHFE contracts
  Price (yuan per tonne)  Change since yesterday’s close (yuan)
Copper  49,310 -800
Aluminium 13,700 -65
Zinc 24,570 -100
Lead 18,415 -20
Tin  141,870 390
Nickel  97,290 -1,230
Changjiang spot snapshot on March 26
  Range (yuan per tonne)  Change (yuan)
Copper  48,970—48,990 -860
Aluminium 13,530—13,570 0
Zinc 24,620—25,420 -130
Lead 18,500—18,700 -50
Tin  142,000—144,000 -500
Nickel  96,800—96,850 -1,725
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