LIVE FUTURES REPORT 22/06: SHFE zinc prices slide 2.3%; nickel continues run of strength

The most-traded August zinc contract dropped to 22,780 yuan ($3,507) per tonne as at 10.13am Shanghai time, down 2.3% or 535 yuan per tonne from Thursday’s closing price.

This follows a similar trend in the LME’s three-month zinc price yesterday, when it fell by more than 2% at the close to end the official session on Thursday $78 lower at $2,917 per tonne.

“Zinc is under significant pressure,” Geordie Wilkes, head of research at Sucden Financial told Metal Bulletin. “The backwardation is still in place as shorts look to roll their position, buying the near dated and selling the cash/three-month,” he added.

“[LME] zinc fell for the sixth straight day and broke below $3,000 per oz for the first time in ten months. The weakness has been stoked by recent gains in inventories on the LME,” ANZ Research noted on Friday.

Zinc stocks at LME warehouses stood at 247,450 tonnes on Thursday, up 36.7% since the beginning of the year. Meanwhile zinc inventories totaled 96,957 tonnes as on June 15, up 25.3% from January 5 – the first day that SHFE stocks were assessed this year.

Zinc’s sister-metal lead also softened during the morning session on Thursday, with the uncertainty surrounding heightened trade tensions between China and the United States continuing to dent market sentiment.

Copper prices were similarly lower, with fears that additional tariffs amid the China-US trade spat could affect economic growth.

Meanwhile, nickel maintained its upward momentum this morning following yesterday’s robust performance, with strong fundamentals continuing to support the metal and helping to offset any negative impact from the escalation in global trade tensions.

Base metals prices

• The most-traded August copper contract on the SHFE edged 20 yuan per tonne lower to 51,760 yuan per tonne.
• The most-traded September nickel contract on the SHFE jumped 1,390 yuan per tonne to 116,540 yuan per tonne.
• The most-traded August aluminium contract on the SHFE inched up 35 yuan per tonne to 14,220 yuan per tonne.
• The most-traded September tin contract on the SHFE rose 340 yuan per tonne to 146,080 yuan per tonne.
• The most-traded July lead contract on the SHFE dipped 5 yuan per tonne to 19,850 yuan per tonne.

Currency moves and data releases

• The dollar index was down by 0.05% to 94.77 as at 11.29am Shanghai time.
• In other commodities, the Brent crude oil spot price increased by 0.79% to $73.39per barrel, and the Texas light sweet crude oil spot price was up by 0.41% to $65.7 per barrel.
• In equities, the Shanghai Composite was up by 0.35% to 2,885.97 as at 11.31am Shanghai time.
• In US data on Thursday, the Philadelphia Federal Reserve Manufacturing Index fell 15 points – its biggest drop since February 2014 – to 19.9 in June. The reading is the lowest since November 2016 and was well below the forecast of 28. Meanwhile, weekly unemployment claims came in slightly below expectations at 218,000, while house prices rose 0.1% in April, against an expected increase of 0.3%.
• Today, there is a host of manufacturing and services purchasing managers’ index (PMI) out across Europe and the United States.
• In addition, there is an Organization of the Petroleum Exporting Countries (OPEC) meeting and an EU economic and financial affairs council (Ecofin) meeting.