Copper Price Peaks Higher in SHFE

Economic Calendar Today:

• United Kingdom Average Earnings Index + Bonus rose to actual 2.3%, while forecast was 2.2%
• UK Claimant Count Change. It came to 25.5K while the expected was -3.0K
• European Consumer Price Index (CPI) y-o-y rose to actual 1.9% while the expected was 1.8%
• United States Crude Oil inventories at -0.930M, while the forecast was -2.333M

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Morning Trade on SHFE

Amid expectations of increased Chinese demand and a weaker dollar, copper prices on the SHFE grew higher during Asian morning trade on May 17.

The most-traded July copper contract on the SHFE rose 210 yuan ($30.48) to 45,380 yuan per tonne as of 03:33 BST. Open interest of the contract was at around 216,944 positions on Wednesday morning. (Metal Bulletin)

Stronger demand has seen copper prices well backed-up this morning.

Shanghai copper premiums went up this week, because of a rise in buying interest from traders. As well as limited availability for authority and nearby bills of landing.

In addition, major Chinese copper producer Jiangxi Copper said on Tuesday that the country’s copper demand rose 22% month-on-month in March to 822,500 tonnes. Mainly driven by the property market and air conditioner sector.

Economic data

US April industrial production rose 1.0% month-on-month – the strongest monthly gain in three years.

“The data pulse overnight was robust, but market moves were more cautious, with US interest rate expectations trimmed and the dollar remaining under pressure,” (ANZ Research)

The dollar index was 0.13% weaker at 97.97 as of 04:00 BST on Wednesday morning.
Market is keeping eye on China’s One Belt One Road (OBOR) policy, though funding restrictions remain a key concern.

“Due to funding constraints, we do not expect OBOR opportunities to become meaningful over the next few years for China. Other than perhaps in very few selected sectors like railway equipment. We believe that, for investment demand, investors should focus on domestic stimulus policy which is far more influential on sectors including resources, materials, machinery and contractors.”  (M.Lynch. Research)

LME stocks

Beginning with LME copper stocks, they fell in today’s trade  by 2,650 tonnes to 322,500 tonnes. FIrstly, deliverable copper stocks at SHFE warehouses rose 799 tonnes to 72,742 tonnes yesterday.
Secondly,  losses in the SHFE-LME arbitrage held at around $90 per tonne. But some buying interest remains. Traders are more active in buying in order to deliver long-term tonnages.

Other base metal contracts

Observing the The SHFE July aluminium contract, it rose 0.36% or 50 yuan per tonne this morning to 14,015 yuan per tonne. Later, the SHFE July zinc contract gained 0.92% or 195 yuan per tonne to 21,505 yuan per tonne.

When considering the SHFE June lead contract, it slipped 0.13% or 20 yuan per tonne to 15,780 yuan per tonne. The September nickel contract rose 60 yuan or 0.08% to 76,660 yuan per tonne. Finishing with Tin, it’s contract was 1,050 yuan or 0.74% higher at 142,050 yuan per tonne.