LIVE FUTURES REPORT 27/12: SHFE base metals prices rebound; aluminium bucks trend

US stocks surged on Wednesday, with major equity benchmarks rising by the most in nearly 10 years and recovering some of the losses made in the weeks before Christmas. The benchmark S&P 500 ended Wednesday up by 5%, the Dow Jones Industrial Average also gained 5%, while the Nasdaq Composite climbed 5.9%.

On Thursday, equities in Asia tracked the stronger tone set by their Western counterparts, with this follow-through strength filtering through to wider markets, including the base metals.

Japan’s Topix was up by 4.70%, while there were more marginal gains in Hong Kong’s Hang Seng index (+0.59%), China’s CSI 300 (+0.64%) and South Korea’s Kospi index (+0.18%).

In response, base metals prices, barring those for aluminium, on the SHFE were up across the board.

The most-traded February copper contract on the SHFE stood at 48,460 yuan ($7,029) per tonne as at 10.03am Shanghai time, up by 420 yuan per tonne from Wednesday’s close.

Providing further support to the base metals were the expectations of a looser financial situation in China next year, according to an analyst based in Shanghai.

“The Chinese government has been working on a series of momentary reforms, such as deduction of additional individual taxes, and people are expecting to see a looser financial environment,” the analyst said.

This looser fiscal policy would allow for greater spending in the country and possibly generate more demand for metal.

Aluminium bucked the firmer tone exhibited by its peers on the SHFE this morning, however, dipping 45 yuan per tonne to 13,745 yuan per tonne as at 10.03am Shanghai time.

“The news of capacity cuts is no longer offering support to the aluminum price. Meanwhile, a decline in prices for the metal’s raw material alumina is a drag on the aluminium price,” Citic Futures said in morning report.

Alumina prices in China have trended downward since mid-November with Fastmarkets MB assessing the price for Chinese alumina, delivered duty paid, at 2,900-2,950 yuan per tonne on December 20, which is down from 3,150-3,200 on November 15.

Base metals prices

• The SHFE May nickel contract was up by 750 yuan per tonne to 88,620 yuan per tonne.
• The SHFE February zinc contract was up by 110 yuan per tonne to 20,825 yuan per tonne.
• The SHFE February lead contract rose 135 yuan per tonne to 17,960 yuan per tonne.
• The SHFE May tin contract moved up by 760 yuan per tonne to 145,130 yuan per tonne.

Currency moves and data releases

• The dollar index was down by 0.23% at 96.80 as at 10.03am Shanghai time.
• In other commodities, the Brent crude oil spot price down by 1.33% at $55.10 per barrel as at 11.39am Shanghai time.
• In equities, the Shanghai Composite Index was down by 0.58% at 2,512.87 as at 10.28am Shanghai time.
• In US data on Wednesday, the Federal Reserve Bank of Richmond’s manufacturing activity index dropped to -8 in December from 14 in November.
• In data today, there is European Central Bank economic bulletin as well as US releases that include unemployment claims, house prices and the Conference Board’s consumer confidence.