LIVE FUTURES REPORT 29/06: SHFE base metals prices edge downward; zinc bucks the weakness

Zinc was the exception to the weaker tone across the SHFE complex this morning, with the metal’s most-traded August contract increasing to 23,195 yuan ($3,502) per tonne as at 10.30am Shanghai time, up by 0.4% or 85 yuan per tonne from Thursday’s close.

Zinc prices have been supported by news that major Chinese smelters are considering an industry-wide 10% output cut to raise flagging metal prices and boost concentrate treatment charges, while smelter Shaanxi Dongling confirmed on Thursday a 62.5% cut to its own production.

The cut by Dongling is significant for the market, but it is unclear whether other Chinese smelters will also reduce output.

In the other base metals, prices remained under pressure from lingering concerns over global trade concerns, which has affect sentiment. In addition, weaker-than-expected data from the United States overnight has fueled fears over a slowdown in global economic growth.

US gross domestic product (GDP) growth increased at an annualized rate of 2% in the first quarter of 2018, against an expected gain of 2.2%, while weekly unemployment claims came in higher than forecast at 227,000.

Other base metals fell

• The SHFE August copper contract dipped 190 yuan per tonne to 51,450 yuan per tonne.
• The SHFE August aluminium contract slipped by 60 yuan per tonne to 14,115 yuan per tonne.
• The SHFE August zinc contract rose by 85 yuan per tonne to 23,195 yuan per tonne.
• The SHFE August lead contract fell 110 yuan per tonne to 20,485 yuan per tonne.
• The SHFE September nickel contract edged down by 200 yuan per tonne to 116,020 yuan per tonne.
• The SHFE September tin contract decreased by 180 yuan per tonne to 143,980 yuan per tonne.

Currency moves and data releases

• The dollar index was down by 0.03% to 95.29 as at 10.31am Shanghai time.
• In equities, the Shanghai Composite was up by 1.2% to 2,820.33 as at 11.44am Shanghai time.
• In US data on Thursday, final first quarter GDP growth came in at 2.0%, below the forecast of 2.2%. Weekly unemployment claims stood at 227,000, missing the forecast of 220,000.
• On the economic agenda today, we have European data including German retail sales and the UK’s current account, final GDP and net lending to individuals as well as EU core and headline flash consumer price index (CPI) estimates of note.
• In US data, we have the core PCE price index, personal spending, the Chicago purchasing managers’ index (PMI) and revised University of Michigan consumer sentiment.
• Looking to the weekend, Chinese manufacturing and non-manufacturing PMI are due on Saturday.