(MB) Base metals prices on the Shanghai Futures Exchange were on divergent paths during Asian morning trading on Thursday February 21, with copper, tin and nickel edging higher, while the others were little changed to slightly weaker. The mixed movements follow the overnight release of the minutes from the US Federal Open Market Committee’s (FOMC) January meeting, in which the central bank left open the possibility it could lift US interest rates later this year.
The news of potential further monetary tightening this year had a generally positive effect on the dollar index, which at 96.51 as at 11.32am Shanghai time, is up from a low of 96.28 on Wednesday. The index remains well below its recent high of 97.37 reached on February 15, however.
In copper, prices on the SHFE were slightly higher during the morning session on Thursday. The most-traded May copper contract stood at 49,590 yuan ($7,371) per tonne as at 10.27am Shanghai time, up by 0.1% or 70 yuan per tonne from Wednesday’s close.
This follows a stronger performance by the red metal on the London Metal Exchange on Wednesday. The three-month copper price closed Wednesday at $6,405 per tonne, $86 per tonne higher than the previous day’s close.
Red metal prices have found support from of a number of recent supply-side developments and rising demand in China following the Lunar New Year holiday (February 4-10).
“Copper prices broke through USD6,300/t amid multiple supply issues and firmer demand in China. Heavy rain in Chile could potentially affect the production at the Chuquicamata and Radomiro Tomic mines. Some companies have already suspended operations due to the rain,” ANZ’s Sen said.
“On demand side, Chinese downstream companies increased their purchases after Chinese New Year holidays,” he added.
Elsewhere in the base metals, tin and nickel prices on the SHFE saw gains of 0.2% and 0.3% respectively, while aluminium was unchanged and zinc and lead were little changed with a slightly downward bias.
