SHFE morning trade: Copper up due to Lower production in Chile


Main Economic Events Today:

  • China Industrial Production y-o-y fell to actual 6.5%, while expected was 7.1%
  • United Kingdom Prime Minister Theresa May Speaks

This Week:

  • Empire State, Philly Fed Manufacturing for May
  • April China Industrial Production
  • Euro Zone Q1 GDP – Revised Reading
  • K. April CPI, Employment & Retail Sales
  • Japan Preliminary First Quarter GDP


Shanghai Futures Exchange

Firstly, copper prices on the SHFE recovered during morning trading on May 15. Due to the news that China had announced more funding for its One Belt One Road initiative. Copper price was as well impacted by reports of lower production in Chile.

The most-traded July copper contract on the SHFE rose 210 yuan per tonne to 45,240 yuan per tonne as of 10:59am Shanghai time.

Secondly, Chinese president Xi Jinping said One Belt One Road plan aims to connect China with Europe, Asia and Africa through various infrastructure projects.

 “The Belt and Road initiative, which was first proposed in 2013, offers the world’s second largest economy a chance to consolidate its political presence in the region. Additionally, the initiative provides China’s battered commodity intensive sectors, many of which are struggling to contain overcapacity, a lifeline to remain relevant for years to come.” (CBA Commodities)

“China has already committed $50 billion to date and that could grow exponentially in the next 5 years. The initiative, which could cost over $1 trillion, is clearly positive for commodity consumption. We note that construction will take place over decades. Realistically gather momentum in the 2020s and will inevitably face roadblocks from political interests of the 60 countries involved.”  (Metal Bulletin)

Thirdly, Cochico announced that copper production in Chile in 1H17 was down 14.6% year-on-year to 1.19 million tonnes, due to the strikes occurring during the period.

LME’s three-month copper contract was up $13 per tonne to $5,581 per tonne as of 03:55am London time.

SHFE, LME copper stocks fall 

Observing the open interest of the July copper contract, it was at around 219,134 position on Monday morning. Following, losses in the SHFE-LME arbitrage held at around $80 per tonne last week. Demand is keeping healthy levels due to the peak season. 
Also, deliverable copper stocks at SHFE-approved warehouses fell 20,238 tonnes or 9.4% week-on-week to 194,993 tonnes as of Friday May 12.
In the meantime, LME copper stocks fell by 7,350 tonnes to 329,375 tonnes on May 12.

Base metals broadly lower; Aluminium bit higher 

Fourthly, the SHFE July aluminium price rose 1.05% or 145 yuan to 13,975 yuan per tonne. Following, SHFE July zinc price dipped 0.09% or 25 yuan to 21,590 yuan per tonne.
Observing the July lead price, it slipped 1.05% or 170 to 15,965 yuan per tonne.
In conclusion, the SHFE September nickel price was 180 yuan or 0.23% lower at 76,830 yuan per tonne. And finishing with the SHFE September tin price who fell 1,240 yuan or 0.87% to 140,990 yuan per tonne. 

Currencies & data

The Brent crude oil spot price up 0.85 to $51.62 per barrel. Texas light sweet crude oil spot price also gained 0.79 to $48.59 per barrel.
Observing the Shanghai Composite, it was up 0.36% to 3.094.53. Most noteworthy, US Empire State Manufacturing Index and NAHB Housing Market Index will be released later today. The dollar index decreased 0.01% on Monday morning to 99.19.

SHFE on May 11th; Copper up due to supply concerns; Better market movement

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Shanghai Futures Exchange continued with positive pushes, and copper price went up despite the short pull down at opening time.

Possible supply  restriction gives backup to prices. Also the news about China’s central bank. They will insert some amounts of capital into the open market. These news also renewed confidence and removed fear of the ”market ground”.
Firstly, price of the greatly active SHFE July copper contract rose 130 yuan ($18.82) to 44,920 yuan per tonne. Coming as of 03:17 BST with around 7,690 lots shifting hands. Open interest of the contract was at around 21,530 positions.


Over the last 6 days, today will be the first time that China’s central bank will inject a net 20 billion yuan. This amount of capital will go straight into the open market today.

“China’s central bank has resumed capital injections, relieving some recent monetary constraints and boosting financial liquidity. As a result, market sentiment has improved to some extent”  (Fast Markets)

Supply-side disruptions are the ones giving the backup to copper prices these days..

Copper prices increase


Secondly, LME copper stocks fell a net 3,625 tonnes to 339,200 tonnes on Wednesday. It is a third successive day of decline within LME-sheds. Thirdly, SHFE copper stocks also fell. While inventories were just down from 1,281 tonnes to 72,930 tonnes on Wednesday.

Copper project in Chile, which was put on hold in March, is cancelled. The company announced these news on Monday. Polish miner KGHM’s Sierra Gorda started this project in the first place.
Following, supply of copper scrap has tightened recently after growing in the first quarter. Meanwhile the breaks at major mines earlier in 2017 are hitting availability of metal. (Based on comments of David Lilley, co-founder of Red Kite Capital Management.)

Other base metals mainly flat; zinc, lead a bit higher


Speaking about the SHFE September nickel price, it was flat at 74,700 yuan per tonne. Following,  SHFE July aluminium price was also flat at 13,725 yuan per tonne.
Furthermore, the SHFE June lead price was up 85 yuan to 16,165 yuan per tonne. Finishing, September tin price wasn’t  changed at 139,000 yuan per tonne.

Currencies & data

Observing the dollar index, it was recently at 99.62 on Thursday. Makes it down for 0.03% as of 03:17 BST. Prices of the Brent crude oil spot, rose 0.27% to 50.38 per barrel. The Texas light sweet crude oil spot price was up 0.15% to $47.50.

“Crude oil was buoyed by a fall in US inventories of 5.25 million barrels and front month WTi rallied towards 48.” (Sucden Financial research data)

Looking at the Indices, Shanghai Composite dipped 0.24% to 3,045.3. US import prices for April rose 0.5%. Better than a forecast of 0.2%



LME base metals broadly higher this morning; Copper benefiting from Strike News (Indonesia)




Tuesday, May 2: Base metals on the LME were loosely higher this morning. Copper went up over $50 per tonne while a small fall for aluminium was the only decline.

The lead market is tense considerably over the last few days. The cash/threes rate is now at $34/35 backwardation, having widened from $10 last week. This is the widest since May 2011, when it was at $38 backwardation.


Workers strike in McMoRan Inc.


Copper price is benefiting from the news that workers from Freeport McMoRan’s Indonesian unit plan to strike through until the end of the month. This will disrupt production expansion plans at the world’s second largest copper mine Grasberg.

Thousands of workers from the Indonesian unit of Freeport McMoRan Inc staged a rally near its Papua mine. Protesting against layoffs by the miner due to a contract dispute with the government.

  • “Freeport is trying to ramp up output and exports at Grasberg after reaching a temporary deal with the government following a 15-week stoppage linked to new mining rules. But customers are concerned that labor unrest could now hit supply.” (Reuters)


Copper edging closer to $5,800/t 


Three-month copper price rose $57.50 per tonne this morning, currently trading at $5,792.50.  Copper’s three-month price saw steady increases in the last week of April amid reports of workers strikes and distribution issues.

Edward Meir, INTL FCStone, said copper could be vulnerable in May with increased downward bias.

“The market finds itself in somewhat of a soft spot going into [the second quarter] given that the big events driving values higher last quarter, namely the Escondida and Grasberg outages, are now behind us and the next wave of labour negotiations will not take place until later this year,” Meir said.

Copper stocks on the LME fell 6,050 tonnes to 253,675 tonnes.

“Workers at PT Freeport Indonesia had started a month-long strike at Grasberg. Now the market is focusing on the risk of tight supply again, pushing up copper prices.”


Global Market

Donald Trump will announce his infrastructure spending plan within the next few weeks. This is expected to provide the industry with renewed confidence.

“It is said that Trump’s infrastructure plan could create four million skilled trades jobs – Trump’s border wall alone is expected to create 21,000 jobs. While the plan will also drive demand for the metals.”

Aluminium saw a slight decline of $1.50 per tonne this morning. Marex Spectron noted:

  • “Aluminium remains the largest spec long of the complex at 28% of OI, but we expect to find some consumer and gamma support with first support between $1800/1900. The price won’t benefit however from any unwind with longs established against shorts across other base metals.”(Metal Bulletin)

Aluminium goes down



The three-month aluminium price was the only metal to see a decline this morning, it fell a small $1.50 per tonne and is currently trading at $1,909.50.
• Aluminium stocks fell 12,050 tonnes to 1,633,325 tonnes.

  • The three-month tin price rose $5 to $19,905 per tonne as it gets closer to the $20,000 per tonne ceiling. Stocks fell 150 tonnes to 2,865 tonnes.