LIVE FUTURES REPORT 28/05: SHFE zinc price climbs 1.7%; others mixed

Base metals prices on the Shanghai Futures Exchange were split into two camps during morning trading on Tuesday May 28, with a stronger dollar and comments from US President Donald Trump suggesting the US was “not ready” to make a trade deal with China pressuring the complex.

“D-day is approaching for increased tariffs on trade between the US and China, with no signs of capitulation from either side. Trump has stated the US isn’t ready to make a deal and that tariffs on Chinese goods ‘could go up very very substantially, very easily’,” David Plank, analyst at Australia and New Zealand Banking Group (ANZ), said in a morning note.

The comments reignited risk-off sentiment in the market, which was compounded by a rebound in the dollar index overnight.

The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, stood at 97.80 as at 9.47am Shanghai time, up from a low of 97.55 on Monday.

A slump in Chinese industrial profits last month, highlighting the effect that a prolonged trade spat between China and the United States is having on the Chinese economy, further weighed on market sentiment.

Profits for China’s industrial firms dropped by 3.7% year on year to 515.4 billion yuan ($74.7 billion) in April, according to data published by the National Bureau of Statistics on Monday. This compared with a 13.9% surge in March, which was the biggest gain in eight months.

This less-friendly backdrop for the base metals was sufficient to keep the SHFE complex under pressure, with copper, aluminium and nickel declining – albeit marginally, while tin and lead were both up by 0.3%.

Zinc was this morning’s standout performer after its most-traded contract climbed by 1.7%.

Zinc’s most-traded July contract rose to 20,695 yuan per tonne as at 10:11 am Shanghai time, up by 335 yuan per tonne from Monday’s close of 20,360 yuan per tonne.

The strength in zinc prices follows news that a 100,000-tonne-per-year zinc smelter in northwest Chinese province of Gansu has suspended operations following a sulfur dioxide leak. The cause of the leak is under investigation.

Other highlights

  • Lead benefited from sister metal zinc’s bullish move this morning, with the metal’s most-traded July contract ticking up to 16,070 yuan per tonne as at 10.11 am Shanghai time, up by 50 yuan per tonne from Monday’s close of 16,020 yuan per tonne.
  • There was no major data of note on Monday with markets in the US and United Kingdom closed for bank holidays.
  • Data of note on Tuesday includes consumer confidence from the US, where the Conference Board’s reading is forecast to strengthen to 130.0 from 129.2 in April after the provisional sentiment reading from the University of Michigan hit a 15-year high.