LIVE FUTURES REPORT 29/01: SHFE base metals have strong start to the week; zinc outperforms

Base metals prices on the Shanghai Futures Exchange were stronger across the board during Asian morning trading on Monday January 29, with zinc the star performer, as the complex continued to benefit from a softer dollar.

The most-traded March zinc contract on the SHFE stood at 27,185 yuan ($4,302) per tonne as of 10.05 am Shanghai time, up by 1,000 yuan or 3.8% from the previous session’s close of 26,185 yuan per tonne.

Open interest of the contract rose to 240,100 positions as at 10.26 am Shanghai time, up by around 26,600 positions from the open at 09.00 am.

General weakness in the dollar continues to underpin the SHFE base metals prices.

The dollar index was up by 0.2% to 89.24 as of 10.59 am Shanghai time, but continues to hover near December 2014 lows.

Robust gains for zinc prices on the London Metal Exchange at the end of last week are also helping to propel SHFE zinc prices higher this morning.

The three-month zinc price on the LME climbed to a new 2018-high on Friday, hitting its highest since August 3, 2007 at $3,481.50 per tonne. It was being supported by a strong fundamental backdrop and the tight market.

“The previous dominant warrant holder has now increased holdings from 50-79% to 80-89%, which indicates metals remain in tight hands. The backwardation in the cash/three-month spread stands at $37.50 per tonne and is unlikely to ease any time soon,” Andy Farida, Metal Bulletin analyst said.

Other base metals gaining ground

  • The SHFE March copper contract price increased 270 yuan or 0.5% to 53,700 yuan per tonne.
  • Tighter import regulations in China saw copper scrap shipments to the country fall considerably in December, stoking supply concerns.
  • “In supply, China’s scrap copper import quotas have decreased considerably, which is underpinning prices for the primary metal,” China’s Galaxy Futures noted.
  • The SHFE May tin contract price increased by 2,870 yuan or 2% to 149,960 yuan per tonne, tracking a stellar performance by LME tin prices on Friday.
  • The three-month tin price on the LME hit its highest since November 2016 after reaching a high of $21,895 per tonne on January 19 – record low stocks and restocking ahead of Lunar New Year(mid-February) have kept tin prices well supported.
  • The SHFE May nickel contract price gained 2,520 yuan or 2.4% to 106,880 yuan per tonne.
  • The SHFE March lead contract price went up 285 yuan or 1.5% to 19,755 yuan per tonne.
  • The SHFE March aluminium contract price increased 125 yuan or 0.9% to 14,750 yuan per tonne.

Currency moves and data releases

  • The dollar index was up by 0.2% to 89.24 as of 10.59 am Shanghai time.
  • In other commodities, the Brent crude oil spot price was down 0.03% to $70.49 per barrel as of 11.15am Shanghai time.
  • In equities, the Shanghai Composite was up by 0.1% to 3,562.46 as of 11.00 am Shanghai time.
  • In data on Friday, the United Kingdom’s gross domestic product (GDP) grew by 0.5% in the fourth quarter of 2017, beating both an expected and previous expansion of 0.4%.
  • Meanwhile in the United States, GDP grew at 2.6% annual rate in the fourth quarter of 2017, according to an “advance” estimate released by the US Bureau of Economic Analysis. This was below an expected and previous print of 3.0% and 3.2% respectively.
  • The economic agenda is light today with the Core PCE Price Index and personal spending from the US of note.

LME snapshot at 02.05 am London time
Latest three-month LME Prices
Price ($ per tonne)  Change since Friday’s close ($)
Copper 7,152 67
Aluminium 2,265 8
Lead 2,648.5 55.5
Zinc 3,576 98
Tin 21,750 150
Nickel 14,020 370

SHFE snapshot at 10.05 am Shanghai time
Most-traded SHFE contracts
Price (yuan per tonne)  Change since Friday’s close (yuan)
Copper (March) 53,700 270
Aluminium(March) 14,750 125
Zinc(March) 27,185 1,000
Lead(March) 19,755 285
Tin (May) 149,960 2,870
Nickel (May) 106,880 2,520

Changjiang spot snapshot on January 29
Range (yuan per tonne)  Change (yuan)
Copper  53,400-53,420 190
Aluminium 14,490-14,530 30
Zinc 27,090-27,890 970
Lead 19,600-19,800 250
Tin  148,000-149,500 2,000
Nickel  105,250-105,550 2,600
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