LIVE FUTURES REPORT 14/10: SHFE base metals prices mixed; copper up marginally

Base metal prices on the Shanghai Futures Exchange were mixed during morning trading on Monday October 14, with the complex largely shrugging off news of a “partial” trade deal being struck between the United States and China at the end of last week.

There was fresh optimism in global markets on Friday after US President Donald Trump announced negotiators from China and the US had reached a substantial “partial” trade deal that would delay the imposition of additional tariffs on Chinese goods. The agreement will also see China buy an extra $40-50 billion of American agricultural products.
But the deal, which some market participants deem to be more of a truce extension than a meaningful step toward an end to the US-China trade war, has not been sufficient to reassure concerned investors.
“While [President Trump] touted the outcome as ‘one of the biggest deals’, the lack of specificity and even the fact this baby-stepped agreement could take weeks to iron out, quickly cooled trader optimism while fearing this could be more of the same old lather, rinse and repeat or the continuous loop of de-escalation re-escalation,” Stephen Innes, Asia Pacific market strategist at AxiTrader, said in a note.
As a result, a degree of caution is pervading the SHFE base metals complex this morning, with the complex giving a mixed performance, with copper, zinc and tin registering minor gains while the rest were down.
The most-traded December copper contract rose to 47,020 yuan ($6,630) per tonne as at 9.41am Shanghai time, up by 110 yuan per tonne - or 0.2% - from Friday’s close of 46,910 yuan per tonne.
Copper’s slightly firmer tone follows miners MMG and Citic Metal declaring force majeure on copper concentrate supply contracts from the Las Bambas mine in Peru at the end of last week.
But large inflows of the red metal into SHFE-registered warehouses have tempered any optimism arising from the supply disruption news. SHFE copper stocks rose by 13.9% or 16,401 tonnes from September 30, to 134,509 tonnes as of Friday, recording the largest gain in percentage terms across the SHFE base metals complex.
Elsewhere, aluminium prices dipped this morning, with a sluggish demand outlook pressuring the light metal. The most-traded November aluminium contract fell to 13,765 yuan per tonne, down by 25 yuan per tonne - or 0.2% - from Friday’s close of 13,790 yuan per tonne.
“Overall, the pick-up in consumption in October [following environmental scrutiny in September] has been slower than expected, therefore aluminium prices are likely to continue a downward trend,” analysts with Chinese broker Citic Futures Research said in a note.
Other highlights
  • Nickel recorded the biggest loss in percentage terms of the SHFE base metals so far this morning, with support from expected tightened supply gradually fading. The most-traded November nickel contract on the SHFE fell to 136,630 yuan per tonne as at 9.41am Shanghai time, down by 0.7% from Friday’s close.
  • The dollar index, which gauges the strength of the US currency against a basket of foreign currencies, was up by 0.1% at 98.43 as at 9.41am Shanghai time.
  • In US data on Friday, import prices increased by 0.2% month on month in September, which was better than the forecast 0.1% decrease. The University of Michigan’s (UoM) consumer sentiment rose unexpectedly to 96 in October, easily surpassing the forecast read of 92. The UoM’s inflation expectations for October stood at 2.5%.
  • In data on Monday, China’s dollar-denominated trade surplus widened to $39.7 billion in September, from $34.8 billion a month earlier.
  • Industrial production from the European Union is of note later.

Susan Zou

susan.zou@metalbulletinasia.com

Published

Susan Zou

October 14, 2019

05:00 GMT

Shanghai