LIVE FUTURES REPORT 29/08: SHFE copper, nickel prices tick up; others under pressure

Base metals prices on the Shanghai Futures Exchange gave a mixed performance during Asian morning trading on Wednesday August 29, with copper and nickel recording respectable gains while the rest of the complex weakened.

The most-traded October copper contract on the SHFE stood at 48,910 yuan ($7,182) per tonne as at 10.01am Shanghai time, up 260 yuan per tonne from Monday’s close.

Copper prices in China seem to be benefitting from follow-on strength from the European session after the three-month copper price on the London Metal Exchange closed $42 per tonne higher on Tuesday amid a bout of buying that had been triggered by 29,475 tonnes freshly canceled across LME warehouses in North America and Asia.

Persistent drawdowns in copper stocks at SHFE warehouses as well as a string of recent cancelations at LME sheds have raised concerns toward the availability of red metal stocks, providing a boost to prices.

SHFE copper stocks fell 5.5% or 8,486 tonnes in the week ended August 24 to total 146,590 tonnes. Stocks have fallen for eight consecutive weeks, with the last increase recorded in the week ended June 29, when stocks totaled 263,968 tonnes.

“The volume of imported copper [entering China] has fallen following the closure of the import window, [while] the cancelation of LME stocks have added to supply concerns among participants,” an analyst with Citic Futures Research noted on Wednesday.

A weaker dollar also provided support to copper prices.

The dollar index is down significantly from its 2018 high of 96.99 reached on August 15; it had dipped to a low of 94.41 on Tuesday, but has since recovered to 94.78 as at 10.02am Shanghai time this morning.

But sluggish demand for copper in China remains a potential headwind for red metal prices, according to analysts with Guotai Junan Futures.

“China’s spot copper market remains weak amid low buying appetite from consumers which could see the upward momentum in copper prices falter,” they said.

Nickel gave a similarly positive performance during the early session on Wednesday, with prices supported by stable demand from the downstream stainless steel industries and tightened availability of nickel ore, the analysts with Guotai Junan Futures noted.

The most-traded November nickel contract rose to 110,430 yuan per tonne at 10.01am Shanghai time, up 0.9% or 1,030 yuan per tonne from Monday’s close.

Base metals prices

  • The SHFE September aluminium contract price dipped 20 yuan per tonne to 14,950 yuan per tonne.
  • The SHFE October zinc contract price dropped 340 yuan per tonne to 21,155 yuan per tonne.
  • The SHFE October lead contract price fell 160 yuan per tonne to 18,250 yuan per tonne.
  • The SHFE January tin contract price slid 1,170 yuan per tonne to 145,430 yuan per tonne.

Currency moves and data releases

  • The dollar index was up 0.08% at 94.78 as at 10.02am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up 0.04% to $75.88 per barrel as at 10.02am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.18% to 2,773.63 as at 10.59am Shanghai time.
  • In US data on Tuesday, the July advance goods trade balance came in at a larger than expected deficit of $72.2 billion – a deficit of $68.6 billion had been forecast. Preliminary wholesale inventories rose by 0.7% in July, outstripping an expected 0.1% increase.
  • The Conference Board Consumer Confidence Index increased to 133.4 in August, up from 127.9 in July, while the Richmond Manufacturing Index was similarly strong at 24 – beating expected and previous readings of 18 and 20 respectively.
  • US data of note today includes the latest estimate for the country’s gross domestic product growth for the second quarter, pending home sales and crude oil inventories.