LIVE FUTURES REPORT 26/09: SHFE base metals prices continue climb; zinc boosted by LME gains

The most-traded November zinc contract on the SHFE traded at 25,490 yuan ($3,850) per tonne as of 02:30 BST, up 315 yuan from Monday’s close, with over 200,000 lots of the contract having changed hands so far.

The LME three-month zinc price had jumped 2% to as high as $3,120 per tonne on Monday.

SHFE base metal prices are generally seeing support from the large drawdown in stocks ahead of China’s weeklong National Day holiday, which begins October 1.

Base metals stocks at SHFE-registered warehouses, except for aluminium, were all lower on September 22 as market participants stepped up procurement before the Chinese holidays.

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. Zinc inventories slipped 2,438 tonnes over the week to 67,225 tonnes on September 22.

On Monday, the SHFE announced that effective September 26 it will charge transaction fees for day trades of the November lead contract at 0.02% of the transacted amount. SHFE lead prices had surged since last week on concerns over supply constraints with the most active lead contract rising to as high as 21,070 yuan per tonne on September 21, this was the highest since December 2016.

“In the short-term, the fee rise by SHFE could result in profit-taking. But in the medium-term, SHFE lead and zinc prices should remain supported. Any corrections are unlikely to be major,” China’s Galaxy Futures said late on Monday.

Rest of complex higher

• The SHFE November copper contract rose 180 yuan to 50,440 yuan per tonne.
• The SHFE November aluminium contract price increased 85 yuan to 16,505 yuan per tonne.
• The SHFE November lead contract price edged up 35 yuan to 20,635 yuan per tonne.
• The SHFE January nickel contract price gained 890 yuan to 84,950 yuan per tonne
• The SHFE January tin contract price jumped 1,450 yuan to 146,800 yuan per tonne.

Currency moves and data releases

• The dollar index was up 0.1% at 92.61 as of 01:47 BST.
• In other commodities, the Brent crude oil spot price eased 0.04% to $56.06 per barrel as of 01:48 BST. The price had surged as high as $59.23 on Monday – the highest since July 2015 – on concerns over supply disruptions after Turkey threatened to close the route for Kurdish shipments in retaliation for holding their independence vote.
• The Shanghai Composite was 0.08% down to 3,338.94 at 03:58 BST.
• Geopolitical tensions in East Asia heightened after North Korea’s foreign minister said on Monday that US president Donald Trump’s recent remarks are a declaration of war, and that Pyongyang has the right to take countermeasures, including shooting down US planes.
• In data on Monday, the German Ifo business climate came in at 115.2, a miss from the expected 116. China’s CB leading index stood at 1.1%, above the previous reading of 1.0%.
• The economic agenda is light today with mainly the CB consumer confidence and new home sales from the USA of note.
• In addition, US Federal Open Market Committee chairwoman Janet Yellen is due to speak at the National Assn for Business Economics Annual Meeting in Cleveland.