LIVE FUTURES REPORT 27/02: SHFE base metals prices buoyed by trade optimism, soft dollar; tin continues retreat

“A weaker USD spurred by a dovish [US Federal Reserve] saw investors return to the base metals sector,” Jack Chambers, interest rate strategist and economist at Australia and New Zealand Banking Group (ANZ), said in a morning note.

Testifying before the Senate Banking Committee in Washington DC on Tuesday, Federal Reserve chairman Jerome Powell reiterated a dovish approach to further interest rate increases, saying that the central bank would be “patient”.

The US currency softened in response; the dollar index, at 96.08 as at 10am Shanghai time, is little changed from its previous close, but is down from 96.41 at roughly the same time on Tuesday.

As a result, most of the base metals traded on the SHFE were up this morning, though gains were limited in copper and aluminium with prices only up marginally.

Tin was the only metal to weaken substantially over the morning trading session on Wednesday; the metal’s most-traded May contract on the SHFE stood at 150,610 yuan ($22,482) per tonne as at 10am Shanghai time, down by 940 yuan per tonne or 0.6% from Tuesday’s close.

Tin continues to retreat from highs reached on Monday after prices surged following news that local miner Yinman Mining had been suspended by the Emergency Management Agency due to an accident at the company’s mine over the weekend.

“Although Yinman’s mine accident has led to worries of mine inspections on a wider scale, in relation to the company’s output itself, the affected volume is quite limited on a national scale,” according to Chinese broker Jinrui Futures.

“Downstream participants were hesitant of the soaring prices on Monday, resulting in muted demand which in turn put downward pressure on tin prices,” Jinrui Futures added.

Base metals prices

• The SHFE April zinc contract price rose by 170 yuan per tonne to 21,875 yuan per tonne.
• The SHFE’s April copper contract edged up 20 yuan per tonne to 50,210 yuan per tonne.
• The SHFE May aluminium contract climbed by 25 yuan per tonne to 13,715 yuan per tonne.
• The SHFE April lead contract price was up by 105 yuan per tonne to 17,130 yuan per tonne.
• The SHFE April nickel contract price fell 10 yuan per tonne to 101,890 yuan per tonne.

Currency moves and data releases

• The dollar index was up by 0.05% to 96.08 as at 10:00am Shanghai time.
• In equities, the Shanghai Composite was up by 0.2% to 2,947.50 as at 10.21 am Shanghai time.
• In European data on Tuesday, the German GfK consumer climate index was stable at 10.8.
• In US data on Tuesday, monthly building permits across both January and February – which were delayed due to the US government shutdown – were recorded at 1.33 million, up from 1.32 million previously and beating expectations of a fall to 1.29 million.
• Housing starts over the same period were worse at 1.08 million, down from 1.21 million previously and missing an expected rise to 1.35 million, while the US house price index (HPI) for February fell to 0.3%, down from 0.4% previously but in line with expectations.
• The Standard & Poor’s/Case-Shiller Composite-20 HPI year on year for February was similarly lower at 4.2%, missing expectations of a dip to 4.5% from 4.6% previously.
• The economic agenda is busy again on Wednesday with European releases that include EU M3 money and private loans.
• From the US, we have the goods trade balance, preliminary wholesale inventories, factory orders, pending home sales and crude oil inventories.
• In addition, German Bundesbank president Jens Weidmann and US Federal Reserve chair Jerome Powell are speaking.