LIVE FUTURES REPORT 10/08: Stronger US dollar, trade tensions weigh on SHFE base metal sector; copper finds support

Base metals prices on the Shanghai Futures Exchange were broadly lower during morning trading on Friday August 10 amid a stronger dollar and ongoing trade tensions between China and the United States.

The US dollar rallied overnight and reached as high as 95.677 as at 7:00 am Shanghai time, hitting a one-month high.

The stronger dollar and ongoing concerns over a possible trade war between China and US pulled the market lower as participants went into risk-off mode.

However, strikes at major copper mines in Chile prevented the price of the red metal from going into free-fall.

The most-traded October copper contract on the SHFE stood at 49,930 yuan ($7,299) per tonne at 09.41am Shanghai time, down just 20 yuan per tonne from Wednesday’s close.

“The strike in the world’s largest copper mine, Escondida, ignited supply concerns within the market and stopped the metal from declining too much,” a Shanghai-based analyst said

“The fundamentals for base metals are pretty much all in tight supply/demand balance with stocks descending, so even though the [stronger] dollar weighed on base metals prices today, they should bounce back in near future,” the analyst said.

Copper stocks on the Shanghai Futures Exchange declined by 4,251 tonnes, or 2.2%, over the previous week to 192,817 tonnes on August 3. Updated figures are due out later today.

“In general, economic data out of  the US is healthy, and heavy Chinese investment in big infrastructure projects will add more copper demand, thus lending support to the red metal’s price,” according to Guotai Junan Securities.

Aluminium saw the biggest price decline, down by 1.08% as at 09.41am Shanghai time, as supply worries due to the strike by workers at Alcoa refineries in Australia eased.

Base metals prices
• The SHFE November nickel contract was down 530 yuan to 113,920 yuan per tonne.
• The SHFE October zinc contract fell 5 yuan per tonne to 21,590 yuan per tonne.
• The SHFE September lead contract dipped 85 yuan per tonne to 18,365 yuan per tonne.
• The SHFE September tin contract was down 1,030 yuan per tonne to 145,980 yuan per tonne.
• The SHFE October aluminium contract fell 160 yuan per tonne to 14,665 yuan per tonne.

Data releases and currency moves
• The dollar index was down 0.11% to 95.56 at 09.41am Shanghai time.
• In other commodities, the Brent crude oil spot price was down by 0.07% to $71.95 per barrel at 09.41am Shanghai.
• In equities, the Shanghai Composite was up 0.22% to 2,800.64 at 09.41 am Shanghai time.
• In data on Thursday, US Producer Price Index was flat with last month, against a forecast reading of 0.02% monthly gains, while the US Jobless claims number came in under forecast at 213,000.
• In data today, US Consumer Price Index, United Kingdom’s Factory Production and Gross Domestic Product, Canadian Employment Change and Unemployment change numbers are due out.

LME snapshot at 0141 London time
Latest 3M  LME Prices
  Price ($/t)  Change since yesterday's close ($)
Copper 6,215.50 -9.5
Aluminium 2,085.50 7.5
Lead 2,121 13
Zinc 2,607 -7.5
Tin 19555 -15
Nickel 13,915 30

SHFE snapshot at 0941 Shanghai time
Most traded SHFE contracts
  Price (yuan/t)  Change since yesterday's close (yuan)
Copper  49,930 -20
Aluminium 14,665 -160
Zinc 21,590 -5
Lead 18,365 -85
Tin  145,980 -1,030
Nickel  113,920 -530

Changjiang spot snapshot on August 10
  Range (yuan/t)  Change (yuan)
Copper  49,810—49,850 310
Aluminium 14,470—14,510 -160
Zinc 21,870—21,920 0
Lead 18,200—18,400 -100
Tin  145,500—146,500 -500
Nickel  113,700—115,400 -100

Violet Li

violet.li@metalbulletinasia.com

Published

Violet Li

August 10, 2018

04:40 GMT

Shanghai