LIVE FUTURES REPORT 31/08: Positive China data provides slight boost to SHFE base metals; copper dips

Base metals prices on the Shanghai Futures Exchange were broadly up during Asian morning trading on Friday August 31 with aluminium and copper weakening while the rest of the complex registered slight gains.

The slightly bullish performance follows the release of better-than-expected data from China – see data section below – which helped to mitigate some of the bearishness surrounding the market due to ongoing trade tensions between China and the United States.

Lead prices outperformed with the metal’s most traded October contract climbing to 18,795 yuan ($2,755) per tonne as at 11.27am Shanghai time, up by 110 yuan per tonne from Thursday’s close.

The heavy metal continues to benefit from a positive fundamental backdrop.

SHFE lead stocks totaled 18,277 tonnes on August 24, down 56.3% from 41,816 tonnes at the start of the year.

“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 copper, prices failed to shrug off concerns of heightening trade tensions between the US and China following news overnight that US President Donald Trump wants to move forward with the imposition of tariffs on another $200 billion worth of Chinese goods as early as next week.

Furthermore, a strengthening dollar against the yuan and weakness in emerging market currencies also weighed on investors’ appetite for the red metals.

The yuan traded at 6.83372 yuan to $1 on Friday, compared with 6.81753 yuan to $1 dollar on Thursday, according to currency exchange rate website Oanda.com.

“Issues in emerging markets also came back into focus, with Argentina’s peso and the Turkey’s lira falling sharply. This saw the Chinese yuan also fall, which raised concerns that consumer would purchase less metal in the future,” ANZ Research noted on Friday.

“The recent weakness in the copper price reflects renewed downward pressure in the yuan in light of the strongly negative correlation between copper prices (denominated in dollars) and the foreign exchange value of the yuan,” Metal Bulletin analyst Boris Mikanikrezai said.

“This takes place amid renewed concern in emerging markets, with the Turkish lira and the Argentinean peso falling to record lows,” Mikanikrezai added.

Base metals prices

  • The SHFE October copper contract fell 60 yuan per tonne to 48,520 yuan per tonne.
  • The SHFE October aluminium contract dipped 60 yuan per tonne to 14,890 yuan per tonne.
  • The SHFE October zinc contract rose 115 yuan per tonne to 21,425 yuan per tonne.
  • The SHFE January tin contract increased 220 yuan per tonne to 146,600 yuan per tonne.
  • The SHFE November nickel contract climbed 920 yuan per tonne to 108,520 yuan per tonne.

Currency moves and data releases

  • The dollar index inched up 0.01% to 94.77 as at 11.27am Shanghai time.
  • In other commodities, the Brent crude oil spot price rose 0.33% to $77.98 per barrel as at 11.27 am Shanghai.
  • In equities, the Shanghai Composite dipped 0.079% to 2,734.98 as at 11.27am Shanghai time.
  • In US data on Thursday, the core PCE price index and personal spending were in line with expectations at 0.2% and 0.4% respectively.
  • In data today, China’s manufacturing purchasing managers’ index (PMI) for August was better than expected at 51.3, while the non-manufacturing PMI surprised to the upside with a print of 54.2, exceeding a forecast reading of 53.8.
  • Later, there is European data including German retail sales and the European Union’s consumer price index flash estimate, while US data due later includes the Chicago PMI and the revised University of Michigan’s consumer sentiment and inflation expectations.

London Metal Exchange, base metals prices

Shanghai Futures Exchange, base metals prices

Changjiang, base metals prices

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