LIVE FUTURES REPORT 29/04: SHFE Cu, Zn prices under pressure; others find support

Base metals prices on the Shanghai Futures Exchange were largely up during morning trading on Monday April 29 due to a softening of the US dollar and the release of positive Chinese data at the end of last week.

The exceptions to this morning’s strength were copper and zinc, the former of which gave the worst performance of the SHFE base metals.

The most-traded June zinc contract on the SHFE stood at 21,585 yuan ($3,203) per tonne as at 10.52am Shanghai time on Monday, down by 0.6% or 135 yuan per tonne from Friday’s close of 21,720 yuan per tonne.

While the dollar has softened below the psychological level of 98, providing some support to the rest of the base metals, it remains in relative high ground and likely to cap any significant price gains in the metals while investors await data later today and this week for further hints on the direction of the US currency.

The dollar index was at 97.98 as at 11.18am Shanghai time on Monday, down from 98.18 at a similar time on Friday.

“The USD eased a touch on Friday, but is above strong support. This week, US data and [Federal Reserve] rhetoric are in focus and are likely to add support,” Daniel Been, analyst at Australia and New Zealand Banking Group (ANZ), said in a morning note.

“This week’s [Federal Open Market Committee] meeting will garner plenty of market attention. A consistent improvement in the US data pulse has led many commentators to reduce the odds of future rate cuts in the US. That said, a benign inflation backdrop has allowed many to maintain their arguments for future rate cuts,” Been added.

Adding to zinc’s weaker tone of late are the less favorable fundamentals implied by the latest data from the International Lead & Zinc Study Group (ILZSG) which pegged the refined zinc market in a 63,000-tonne surplus in January-February, considerably higher than the 28,000-tonne surplus in the same period of the previous year.

Copper prices were also weaker on Monday, with the red metal’s most-traded June copper contract on the SHFE stood at 48,870 yuan per tonne as at 10.52am Shanghai time on Monday, down by 0.2% or 100 yuan per tonne from Friday’s close of 48,970 yuan per tonne.

Other highlights

  • Other base metals traded on the SHFE were more positive on Monday morning, with industrial data from China released over the weekend providing some support.
  • China’s industrial profits grew by 13.9 % year on year in March, the largest increase in eight months, according to data from the country’s National Bureau of Statistics.
  • Tin was the biggest gainer of the SHFE base metals on Monday morning, with the metal’s most-traded September contract climbing by 0.8% or 1,230 yuan per tonne to 147,710 yuan per tonne as at 10.52am Shanghai time.
  • The Shanghai Composite Index declined by 0.11% to 3,083.08 as at 11.30 am Shanghai time.
  • In US data on Monday, key releases include the core PCE price index and personal spending.
  • Bank of England governor Mark Carney is also scheduled to speak on Monday.
  • Looking ahead to Tuesday, China’s non-manufacturing and manufacturing purchasing managers’ indices (PMI) are due.