LIVE FUTURES REPORT 26/09: SHFE base metals consolidate ahead of FOMC meeting

Movements in the SHFE base metals were fairly limited but prices were generally down due to persisting negative sentiment following an escalation in trade tensions between the United States and China earlier this week.

The exceptions to the weakness were nickel and copper, which managed to eke out marginal gains, with the lingering US-Sino trade dispute capping any significant gains.

The most-traded November copper contract on the SHFE stood at 50,480 yuan ($7,349) per tonne as at 10.36am Shanghai time, up by 0.2% or 120 yuan per tonne from Tuesday’s close.

The red metal is likely finding support from an easier dollar, which has drifted lower ahead of today’s FOMC meeting. An interest rate increase is widely expected, but investors will be scrutinizing the accompanying statement for any language which could dictate short-term movement in the dollar.

The dollar index was little changed at 94.15 as at as at 10.35am Shanghai time, though this is down from 94.35 at roughly the same time on Tuesday.

“While markets have priced in a further 25 basis point rate hike at Wednesday’s US Federal Open Market Committee meeting, the central bank’s forward-looking guidance could prove a significant risk event if the Federal Reserve adopts a more hawkish stance,” Metal Bulletin analyst James Moore said.

“The tone of the accompanying monetary policy statement will have implications for the dollar, risk appetite and, therefore, the copper price to a certain extent,” Metal Bulletin analyst Boris Mikanikrezai added.

As such, most investors seem content to watch and wait before making their next move, leaving the other SHFE base metals in consolidation mode.

Base metals prices

• The SHFE November aluminium contract dipped 15 yuan to 14,595 yuan per tonne.
• The SHFE November zinc contract dropped 155 yuan per tonne to 21,570 yuan per tonne.
• The SHFE November lead contract slid 210 yuan per tonne to 18,100 yuan per tonne.
• The SHFE November nickel contract edged up 40 yuan per tonne to 105,430 yuan per tonne.
• The SHFE January tin contract fell 820 yuan per tonne to 146,050 yuan per tonne.

Currency moves and data releases

• The dollar index was unchanged at 94.15 as at 10.35am Shanghai time.
• In other commodities, the Brent crude oil spot price rose 0.43% to $81.82 per barrel as at 10.35 am Shanghai.
• In equities, the Shanghai Composite jumped 1.48% to 2,821.88 as at 11.05am Shanghai time.
• In data on Tuesday, the Conference Board consumer confidence index came in at 138.4, beating a forecast of 132.2 while the German wholesale price index was at 0.3%, beating estimates of 0.2%.
• In data today, we have China’s Conference Board leading index as well as US releases including new home sales, the FOMC’s rate decision and statement and crude oil inventories.