LIVE FUTURES REPORT 30/08: SHFE copper, nickel prices retreat; lead, ali supported

Base metals prices on the Shanghai Futures Exchange were broadly up during Asian morning trading on Thursday August 30, with only copper and nickel bucking the trend.

Copper prices underperformed on the SHFE during the early session on Thursday, with the metal’s most-traded copper contract falling to 48,670 yuan ($7,134) per tonne as at 10.40am Shanghai time, down by 0.3% or 160 yuan per tonne from Wednesday’s close.

The weakness in the red metal comes amid a decline in the yuan against the dollar; the Chinese currency had staged a recovery against its US counterpart in recent days but has since weakened while the trade war between the United States and China grinds on.

The yuan was trading at 6.8175 yuan to $1 on Thursday, compared with 6.8039 yuan to $1 on Monday, according to currency exchange rate website Oanda.com. This compares with a rate of 6.3949 yuan to $1 on June 15.

In addition, concerns over the ongoing US-China trade war continue to dampen investors’ appetite for the red metal and consequently pressure prices lower.

Despite optimism in the market over a trade agreement reached between the US and Mexico earlier this week and positive developments in negotiations over the North American Free Trade Agreement, a lack of progress between China and the US continues to dominate market focus with a fresh round of tariffs between the two set to take effect next week.

The rest of the SHFE complex, bar nickel, was higher during the early session on the Thursday, led by a 1.7% jump in lead prices.

Lead continues to benefit from a bullish backdrop of low on-exchange stocks and tightened supply of lead ore and concentrate globally.

SHFE lead stocks totaled 18,277 tonnes on August 24, down 56.3% from 41,816 tonnes at the start of the year. Stocks at London Metal Exchange warehouses totaled 126,225 tonnes on Wednesday, which is down by 11.2% from 142,225 tonnes on January 2 – the first trading day of 2018.

“This comes at the time when global mine output fell by 98,000 tonnes or 4.2% in the first half of 2018 according to the latest International Lead and Zinc Study Group data. This is another indication that the global lead concentrate market has tightened and likely to remain so until year end,” Metal Bulletin analyst Andy Farida said.

In aluminium, prices were underpinned by concerns of supply tightness for the raw material alumina due to delayed shipments out of Australia and production curbs in major Chinese production hubs due to stringent environment inspections.

In addition, lingering concerns over disruptions to Russian aluminium supply also provided support to the light metal market, ANZ Research noted on Thursday.

Base metals prices

  • The SHFE October lead price surged 305 yuan per tonne to 18,585 yuan per tonne.
  • The SHFE October zinc contract price rose 105 yuan per tonne to 21,200 yuan per tonne.
  • The SHFE October aluminium contract price was up 50 yuan per tonne to 14,925 yuan per tonne.
  • The SHFE January tin contract price edged up 120 yuan per tonne to 146,070 yuan per tonne.
  • The SHFE November nickel contract price dipped 250 yuan per tonne to 109,640 yuan per tonne.

Currency moves and data releases

  • The dollar index was up by 0.06% to 94.59 as at 11.51am Shanghai time.
  • In other commodities, the Brent crude oil spot price was down by 0.06% to $77.22 per barrel as at 10.38am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.85% to 2,746.85 as at 11.30am Shanghai time.
  • In US data on Wednesday, gross domestic product rose at an annual rate of 4.2% in the second quarter of 2018, according to the US Bureau of Economic Statistics’ latest estimate. The advance estimate had pegged GDP growth for the April-June quarter at 4.1%.
  • Pending home sales in the US fell 0.7% month on month in July, marking the seventh consecutive monthly decline, while crude oil inventories fell more than expected in the week ended August 24 with a 2.6 million-barrel drawdown – a decline of 700,000 barrels had been forecast.
  • US data of note on Thursday includes the core PCE price index, personal spending, personal income and unemployment claims.

London Metal Exchange, base metals prices

Docherty, Kyle (MB - SG)

Shanghai Futures Exchange, base metals prices

Docherty, Kyle (MB - SG)

Changjiang spot prices

Docherty, Kyle (MB - SG)

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