LIVE FUTURES REPORT 19/12: SHFE base metals prices mostly down on lack of clear economic policies from China

Investors and economists alike looked forward to clear direction on the revamping of China’s economy, such as an easing of protectionist policies to allow further growth and innovation, but were disappointed to hear more of the same old rhetoric defending the current policies.

“Xi’s speech at the start of an economic summit contained none of the new economic policies the market was hoping for. It also had a provocative tone, stoking fears that the negotiations in trade talks between the US and China may struggle to find a common ground,” ANZ Research noted.

Consequently, most of the base metals on the SHFE fell, with copper’s most-traded February contract price and nickel’s most-traded May contract price both slipping by around 1.4%.

The news from China, coupled with weak economic data from the US this week drove the copper price lower despite global inventory level remaining supportive.

The International Copper Study Group estimates that the refined copper market would record a deficit of 90,000 tonnes and 65,000 tonnes in 2018 and 2019 respectively.

Meanwhile, a bleak demand outlook from Chinese steel mills and concerns over a rapid decline in domestic housing market continued to put downward pressure on the nickel market, according to Fastmarkets analyst Andy Farida.

Elsewhere, zinc’s most-traded February contract price dropped 1%, tin’s most-traded May contract price fell 0.4%, and aluminium’s most-traded February contract price slipped 0.3%.

Lead’s most-traded January contract price bucked the downward trend, however, to rise 1%.

Fastmarkets analyst James Moore noted that the fundamentals in the refined lead market are set to remain supportive in 2018-2019.

The International Lead & Zinc Study forecast the refined lead market to record a 123,000-tonne deficit in 2018 and a further 17,000-tonne shortfall in 2019.

Base metals prices

• The SHFE May nickel contract was down by 1,250 yuan ($181) per tonne to 89,360 yuan per tonne.
• The SHFE February zinc contract dropped by 200 yuan per tonne to 20,830 yuan per tonne.
• The SHFE January lead contract rose by 190 yuan per tonne to 18,410 yuan per tonne.
• The SHFE May tin contract slid by 610 yuan per tonne to 145,600 yuan per tonne.
• The SHFE February copper contract dipped by 700 yuan per tonne to 48,230 yuan per tonne.
• The SHFE February aluminium contract fell by 40 yuan per tonne to 13,700 yuan per tonne.

Currency moves and data releases

• The dollar index was down slightly at 96.89 as at 9.23am Shanghai time.
• In other commodities, the Brent crude oil spot price was at $55.95 per barrel as at 9.24am Shanghai time.
• In equities, the Shanghai Composite Index was down by 0.6% to 2,562.54 as at 10.58am Shanghai time.
• In European data on Wednesday, Germany is scheduled to release its producer price index (PPI) number, while the UK will publish a series of reports: PPI, consumer price index, retail price index, house price index. The Confederation of British Industry is also reporting on the industrial order expectations today.
• Meanwhile, the National Bank of Belgium will report on the Belgian business climate.
• In the US, the Bureau of Economic Analysis will release data on international transactions.
• In China, the Conference Board is due to provide information on leading economic indicators today.