LIVE FUTURES REPORT 17/01: SHFE base metals prices soften on stronger dollar, renewed US-China concerns

Base metals prices on the Shanghai Futures Exchange were little changed to weaker during Asian morning trading on Thursday January 17, with the complex coming under pressure from a firmer dollar and renewed US-China concerns.

Copper, aluminum, lead and zinc prices recorded slight losses in early trading on Thursday, while nickel and tin exhibited more significant weakness with both declining by 0.6%.

The dollar continues to hold above the psychological level of 96, with the firm US currency of late becoming a drag on base metals prices.

The dollar index stood at 96.07 as at 10.02am Shanghai time on Thursday, little changed from roughly the same time on Wednesday, but up significantly from a low of 95.03 on January 10.

Adding to this morning’s negative tone across the SHFE base metals was a greater degree of caution among investors amid worries of a likely increase in US-China tensions after The Wall Street Journal reported that the US Justice Department is pursuing a criminal case against Chinese tech firm Huawei Technologies Co for allegedly stealing trade secrets from US business partners.

Huawei could face an indictment soon, according to the report.

The news stoked fears of a ratcheting up in tensions between China and the United States, with participants opting for a more cautious approach to trading this morning.

The US Federal Reserve released its Beige Book on economic conditions on Wednesday, saying the overall economic outlook remains positive. In addition, concerns about the eurozone economy after the UK parliament rejected Prime Minister Theresa May’s plan for the United Kingdom’s exit from the European Union (in the process known as Brexit) suppressed the British pound and supported the dollar's upward movement.

In nickel, weakened demand from the Chinese stainless steel industry after mills had completed restocking the metal to cover their needs over the coming Chinese New Year holidays on February 4-10.

“The nickel price will enter a period of correction as the price right now is very higher. The buying capacity from stainless steel refineries is weaker as many have already stockpiled enough material. And [there is] no big news on demand side to support the price,” a nickel analyst on Shanghai.

The most-traded May nickel contract on the SHFE stood at 93,230 yuan ($13,785) per tonne as at 10.04 am Shanghai time, down 570 yuan per tonne from Wednesday’s close. The price remains near November 2018 highs.

Base metals prices
  • The SHFE March copper contract edged down by 30 yuan per tonne to 47,350 yuan per tonne.
  • The SHFE March aluminium contract decreased by 5 yuan per tonne to 13,395 yuan per tonne.
  • The SHFE March zinc contract fell by 5 yuan per tonne to 20,855 yuan per tonne.
  • The SHFE February lead contract slid by 5 yuan per tonne to 17,585 yuan per tonne.
  • The SHFE May nickel contract dropped by 570 yuan per tonne to 92,660 yuan per tonne.
  • The SHFE May tin contract was down by 840 yuan per tonne to 147,950 yuan per tonne.

Currency moves and data releases
  • The dollar index was up 0.01% to by 96.07 as of 10.02 am Shanghai time.
  • In equities, the Shanghai Composite was down 0.46 % to 2,582.19 as of 11.41 am Shanghai time.
  • In data from the UK on Wednesday, consumer prices rose at an annual rate of 2.1% in December last year, slowing from 2.3% in the prior month. The producer price index input for the same month came in at -1%, down from -2.6% previously.
  • In US data on Wednesday, import prices declined by 1% in December 2018, after a 1.9% fall in the prior month, while crude oil inventories fell by 2.7 million barrels to 437.1 million barrels in the week ended January 11.
  • In data on Thursday, European releases include the Italian trade balance, a Bank of England credit conditions survey and EU final core and headline consumer price indices.
  • US data due to be released on Thursday includes the Philadelphia Fed manufacturing index, unemployment claims and natural gas storage.
  • In addition, US Federal Open Market Committee member Randal Quarles is speaking.

London Metal Exchange, base metals prices

Shanghai Futures Exchange, base metals prices

Changjiang spot prices, base metals prices

Hui Li

hui.li@metalbulletinasia.com

Published

Hui Li

January 17, 2019

05:15 GMT

Shanghai