LIVE FUTURES REPORT 28/09: SHFE base metals under pressure amid consolidation, profit-taking ahead of holidays

Base metals prices on the Shanghai Futures Exchange (SHFE) were all weaker during the Asian morning trading session on Thursday September 28, as prices continued to consolidate recent gains and investors took profits ahead of China’s week-long National Day holiday next week.

The most-traded November zinc contract on the SHFE traded at 25,580 yuan ($3,853) per tonne as of 03:33 BST, down 310 yuan from Wednesday’s close, with around 278,000 lots of the contract having changed hands so far.

Open interests for most of the metals fell during morning trading, as investors closed their positions and took profits in the run-up to China’s week-long National Day holiday, which begins on October 1.

SHFE base metals prices had been supported earlier in the week by large drawdowns in most base metals stocks at SHFE-registered warehouses as market participants stepped up procurement ahead of the Chinese holiday.

“SHFE zinc prices should continue to remain supported, though the market has generally turned cautious ahead of the holidays,” China’s Galaxy Futures said late on Wednesday.

The increased possibility of a US rate increase at the end of the year and strengthening dollar could check the upside for commodities prices, some market observers noted.

The dollar has continued to strengthen after Wednesday’s release of US president Donald Trump’s tax reform plan which included corporate and individual tax cuts and hawkish comments from US Federal Open Market Committee chairwoman Janet Yellen on Tuesday. Yellen had noted that it would be “imprudent” to keep monetary policy on hold until inflation reaches 2%, thus lending weight to the possibility of a US rate increase in December.

Rest of complex lower

  • The SHFE November copper contract fell 210 yuan to 50,330 yuan per tonne.
  • The SHFE November aluminium contract price decreased 125 yuan to 16,365 yuan per tonne.
  • The SHFE November lead contract price eased 175 yuan to 20,530 yuan per tonne.
  • The SHFE January nickel contract price dipped 1,670 yuan to 83,310 yuan per tonne
  • The SHFE January tin contract price slipped 910 yuan to 146,350 yuan per tonne.

Currency moves and data releases

  • The dollar index was up 0.05% to 93.50 as of 03:48 BST. The index had reached as high as 93.61 on Wednesday, the highest since August 23.
  • In other commodities, the Brent crude oil spot price fell 0.05% to $57.61 per barrel as of 03:48 BST.
  • In equities, the Shanghai Composite index was recently 0.17% lower at 3,339.53.
  • In US data on Wednesday, pending home sales fell 2.6% in August, more than the expected decline of 0.5%, while weekly crude oil inventory declined 1.8 million barrels, against an expected 2.9-million-barrel increase. Durable goods orders in August came in at 1.7%, above the forecast of 1.0%, while core durable goods in August were in line with estimates at 0.2%.
  • Economic data due later today includes final second GDP, unemployment claims, final GDP price index, goods trade balance and preliminary wholesale inventories from the USA.

SHFE snapshot at 1033 Shanghai time
Most traded SHFE contracts
  Price (yuan/t)  Change since yesterday’s close (yuan)
Copper  50,330 -210
Aluminium 16,365 -125
Zinc 25,580 -310
Lead 20,530 -175
Tin  146,350 -910
Nickel  83,310 -1,670

LME snapshot at 0333 London time
Latest 3M  LME Prices
  Price ($/t)  Change since yesterday’s close ($)
Copper 6,428.5 -8.5
Aluminium 2,131.5 0
Lead 2,460 -2
Zinc 3,113.5 8.5
Tin 20,655 -45
Nickel 10,290 50

Changjiang spot snapshot on September 28
  Range (yuan/t)  Change (yuan)
Copper  50,530-50,550 90
Aluminium 16,110-16,150 -30
Zinc 26,150-26,950 -100
Lead 21,400-21,600 0
Tin  143,500-145,500 -500
Nickel  84,000-85,000 -900
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