LIVE FUTURES REPORT 27/11: SHFE copper prices buoyed by supply-side disruptions; nickel subdued

Copper prices on the Shanghai Futures Exchange were stronger during Asian morning trading on Monday November 27, with the red metal finding support from declining stocks and ongoing industrial action in Peru and Chile.

The most-traded January copper contract on the SHFE stood at 54,520 yuan ($8,292) per tonne as of 02:17am London time, up by 180 yuan from Friday’s close, with around 103,000 lots traded so far.  Open interest of the contract was around 168,000 positions, down 1,100 positions from Friday’s close.

Copper prices continue to be supported by news of industrial action in Peru and Chile that began last week.

On November 22, strike action at Southern Peru Copper Corp escalated with union workers blocking a company-owned train line used to transport concentrates from its mines to the smelter.

“Workers at Southern Copper remained on strike on Friday, with company smelters now having to operate on stockpiled ore and concentrate to keep producing. Despite striking workers blocking the railway line to the smelter, the rest of the operations are running at about 70% capacity,” ANZ Research said on Monday.

On November 23, union workers at the Escondida copper mine in Chile began a 24-hour strike in response to the mine laying off about 120 workers following a review of its operations.

“BHP (which operates Escondida) says the mine is running normally however plants are running at reduced rates,” ANZ Research added.

Meanwhile, declining stocks have also given copper prices a fresh boost this morning.

London Metal Exchange stocks fell a net 5,475 tonnes to 213,600 tonnes on Friday, with stocks falling a net total of 27,800 tonnes in the week to November 27.

“On the supply side, the strikes at Escondida copper mine and Southern Peru Copper will lead to a supply shortage and the falling LME copper inventories will bolster copper prices further,” China’s Citic Futures Research noted.

Market focus will be in Shanghai this week for the Cesco Asia Copper Week where spot copper concentrate treatment and refining charges negotiations will take place.

Metal Bulletin’s spot copper concentrate index settled at $85.90 per tonne and 85.9 cents per lb on November 15, down by $3.30 per tonne and 3.3 cents per lb compared with two weeks earlier.

Nickel subdued on weaker demand

  • The SHFE’s most-traded May nickel contract price slid 500 yuan to 96,380 yuan per tonne.
  • After a strong performance last week, the rally in nickel ran out of steam after the metal came under pressure from a slowdown in demand and rising stocks.
  • Nickel stocks at SHFE-listed warehouses rose by 4.3% or 1,789 tonnes week on week to 43,397 tonnes as of Friday.
  • “On the supply side, the winter output cuts for nickel were not as extensive as people had expected. While on the demand side, demand from the stainless steel sector is expected to weaken as a result of subdued stainless steel prices due to the approaching year-end,” Citic Futures Research said.

Lead stronger; rest of complex under pressure

  • The SHFE January zinc contract price dipped 165 yuan to 25,420 yuan per tonne.
  • The SHFE January lead contract price gained 120 yuan to 18,640 yuan per tonne
  • The SHFE January aluminium contract price dropped 5 yuan to 15,040 yuan per tonne.
  • The SHFE January tin contract price edged down 180 yuan to 143,100 yuan per tonne.

Currency moves and data releases

  • The dollar index was up by 0.06% at 92.80 as of 02:17am London time.
  • In other commodities, the Brent crude oil spot price rose by 0.08% to $63.77 per barrel while the Texas light sweet crude oil spot price was down by 0.47% to $58.67.
  • In equities, the Shanghai Composite was down by 0.63% to 3,332.65
  • Today’s economic agenda is light with mainly China’s industrial profits and new homes sales from the United States of note.
  • In addition, US Federal Open Market Committee members Neel Kashkari and William Dudley are speaking.

LME snapshot at 0218am London time
Latest three-month LME Prices
  Price
($ per tonne)
 Change since Friday's close ($)
Copper 7012.5 10.5
Aluminium 2126.5 -5.5
Lead 2480 0
Zinc 3219.5 -16
Tin 19410 -100
Nickel 11970 -65
SHFE snapshot at 1017am Shanghai time
Most-traded SHFE contracts
  Price
(yuan per tonne)
 Change since Friday's close (yuan)
Copper  54,520 180
Aluminium 15,040 -5
Zinc 25,420 -165
Lead 18,640 120
Tin  143,100 -180
Nickel  96,380 -500

Changjiang spot snapshot on November 27
  Range
(yuan per tonne)
 Change (yuan)
Copper  54,340—54,360 380
Aluminium 14,750 — 14,790 -10
Zinc 25,630—26,430 -70
Lead 18,500—18,700 100
Tin  142,000—143,500 500
Nickel  95,550—95,750 300

Susan Zou

susan.zou@metalbulletinasia.com

Published

Susan Zou

November 27, 2017

04:02 GMT

Shanghai