SHFE base metals prices edge higher across board

Base metals prices on the Shanghai Futures Exchange were all up during Asian morning trading on Wednesday, with the complex benefitting from a softening in the dollar overnight and positive sentiment stemming from a stronger showing in China’s equities market.

The SHFE January nickel contract rose 680 yuan per tonne to 103,400 yuan per tonne while SHFE December zinc contract ticked up 330 yuan per tonne to 22,220 yuan per tonne.

The SHFE December lead contract was up 45 yuan per tonne to 18,170 yuan per tonne, January tin contract increased 420 yuan per tonne to 148,090 yuan per tonne and December copper contract edged up 70 yuan per tonne to 50,130 yuan per tonne.

The dollar index weakened to 95.93 as 11.43am Shanghai time, down from the two-month high of 96.16 reached on Tuesday.

The softness in the US currency has led to a boost in appetite for the base metals among investors, with prices on the SHFE rising across the board this morning, though gains have been somewhat limited in most metals.

Providing further support to the complex was news that Chinese officials have begun to take steps to ease liquidity issues and stabilize equity markets with local authorities in the Shanghai region pumping funds into private companies. The development has also seen the Shanghai Composite Index climb 1.5 percent so far.

“This seems to have triggered the Chinese metals buyers who have been standing aside back into action and this morning all the metals have rallied in the Asian session,” Malcolm Freeman of Kingdom Futures said in a monitored report on Wednesday.

Zinc prices were up the most on the SHFE during Asian morning trading, ignoring data showing further rises in Chinese output, with the metal’s most-traded December contract rising to 22,220 yuan ($3,201) per tonne as at 9.50am Shanghai time, up by 330 yuan per tonne from Tuesday’s close.

Tin and aluminium, meanwhile, were also higher while both continued to benefit from supply-side concerns, with the latter supported by expectations of a decline in tin shipments from Indonesia following the suspension of one of the country’s key smelter inspectors.

“While the recent developments in Indonesia have somewhat raised supply risks, we think that there is presently sufficient supply in the market to prevent an immediate sharp reaction in tin prices and premiums. That said, supply/demand dynamics suggest that the refined tin market has gradually tightened this year, which should underpin a stronger tin price in the months ahead,” Boris Mikanikrezai, Fastmarkets analyst said.

The rest of the complex recorded more moderate gains with investors likely to be adopting a cautious approach to trading today ahead of some key data releases in the United States, which could have some bearing on the strength of the dollar and in turn on base metals prices.

In other commodities, Brent crude oil was up by 0.34 percent at $76.49 per barrel.

In equities, the Shanghai Composite Index was at 2,626.64 as at 11.24am Shanghai time.

In data today, there is a host of flash manufacturing and services purchasing managers’ index (PMI) releases out across Europe and the US.