LIVE FUTURES REPORT 24/05: SHFE copper under pressure on stronger US dollar; lead continues to tick higher

The most-traded July copper contract price dropped to 51,350 ($8,046) per tonne as of 10.04am Shanghai time, down 420 yuan per tonne from yesterday’s close.

The three-month copper price on the LME closed at $6,835 per tonne on May 23, down 1.84% from previous trading close.

The US dollar index performed strongly overnight, which capped the gains of the red metal prices seen yesterday morning. The US dollar index reached 94.188 at about 01.00am Shanghai time today, the highest level since December 2017.

“The rebound of the US dollar index set a hurdle for the copper price rally, and attention needs to be paid to the impact of the Federal Open Market Committee (FOMC) minutes on US dollar performance,” Citic Futures said.

The improving supply-side situation put additional downward pressure on copper prices.

“The market also began to weigh up the potential for a recovery in copper output from Indonesia, with Rio Tinto announcing that it was ready to accept a $3.5 billion deal to sell its stake in the Grassberg mine to resolve an ownership wrangle,” ANZ Research said.

Lead prices on the SHFE continued the upswing seen since the start of this week, benefiting from the gains on the LME and an opened arbitrage window. 

Standing at 20,055 yuan per tonne as of 10.04am Shanghai time, the most-traded July contract price has rallied almost 4% since Monday’s close, also hitting the highest level since December 2016.

“The opened arbitrage window pushed the sentiment on lead higher with investors aiming to profit from the spread between LME and SHFE prices,” one trader based in Shanghai said.

“Lead is really hot these days since the import window opened. And since China is in deficit supply of this metal, we might bring as much as we can at this profitable opportunity,” added a second trader in southern China.

“The lead concentrate TC (treatment charge) might fall to $10-15 per tonne from last month’s $15-30 due to the rising price of the metal. Although the concentrates market is not tight, the rising profitability of trading the metal has made the treatment charge tumble,” an official at one lead smelter in southern China said.

Zinc and nickel under pressure, aluminium and tin buoyed

• The SHFE July zinc contract price dropped 185 yuan to 23,420 yuan per tonne.
• The SHFE July nickel contract price slipped 600 yuan to 107,840 yuan per tonne.
• The SHFE June aluminium contract price inched up 75 yuan to 14,675 yuan per tonne.
• The SHFE September tin contract price rose 270 yuan to 147,530 yuan per tonne.

Currency moves and data releases

• The dollar index was up by 0.01% to 93.95 as of 10.04 am Shanghai time.
• In other commodities, the Brent crude oil spot price edged down by 0.15% to $79.52 per barrel, and the Texas light sweet crude oil spot price was up by 0.29% to $71.63 as of11.46 am Shanghai time.
• In equities, the Shanghai Composite was down 0.04% to 3,167.83 as of 11.30 am Shanghai time.
• In US data yesterday, new home sales in April stood at 662,000, below the forecast of 680,000. Flash services PMI and manufacturing PMI both exceeded expectations with a 55.7 and 56.6 reading, respectively.
• In data today, UK retail sales, and US unemployment claims and existing home sales are of note.