SHFE non-ferrous metal futures rise after holiday

By the end of the daytime trading session on October 10, the SHFE's most-traded copper contract for November delivery surged by 3.4% from its closing price on September 30 to Yuan 85,910/tonne ($12,061/t). Meanwhile, the most-traded November aluminum and nickel contracts also rose by 1.5% and 1.1% respectively from their pre-holiday levels to close at Yuan 20,980/t and Yuan 122,180/t.

The rise in copper futures after the holiday was driven by both improved macroeconomic sentiment and growing concerns over potential global copper supply disruptions, market watchers said.

On the macro front, forecasts for a U.S. Federal Reserve interest rate cut have strengthened amid signs of a slowdown in the U.S. labor market. According to the ADP employment report released on October 1, private-sector employment in the U.S. fell by 32,000 to 134.53 million in September, the lowest level since March 2023.

In the absence of official non-farm payroll data due to the U.S. government shutdown, the weak employment data fueled market expectations of a rate cut, boosting overall risk appetite across commodities, including non-ferrous metals.

Meanwhile, news reports pointing to tightening global copper supply during the holiday further bolstered bullish sentiment among Chinese market participants. Data released on September 30 by Chile's National Statistics Institute showed that copper output in the world's largest copper producer fell by 9.9% year on year in August, marking the sharpest decline in over two years.

Moreover, reports last week said that the supervisors' union at Chile's Los Pelambres copper mine had rejected a contract offer, raising the risk of a strike. These events collectively intensified market concerns over a potential shortage of global copper supply.

Riding the overall upbeat sentiment, the SHFE non-ferrous metal futures posted broad gains after trading resumed on October 9.

After the holiday break, the SHFE warehouse inventories of all three metals also increased. As of October 10, copper and nickel stocks in SHFE's bonded and standard warehouses swelled by 15.4% and 12.2% from September 30 to 109,690 tonnes and 33,119 tonnes, respectively, while aluminum inventories edged up by 1% to 124,777 tonnes.

Written by Iris Pang, pangjunyu@mysteel.com