Singapore 18/01/2016 - Copper contracts on the Shanghai Futures Exchange rose on Monday morning on after China’s central bank said it will implement a reserve requirement ratio to some banks involved in the offshore yuan market.
The most active SHFE March copper contract rose 150 yuan to 34,950 yuan, with around 470,000 lots of the contract changing hands so far on Monday. Open interest was recently around 320,000 positions, up from 317,570 positions at Friday’s close.
The People’s Bank of China (PBoc) said on Monday the new RRR rules would become effective January 25. The statement confirmed a Reuters source-based story from Sunday that the PBoC is preparing to raise the RRR for yuan deposits placed yuan clearing banks in a bit to stem speculation in the currency.
The offshore yuan opened at 6.5949 against the dollar on Monday morning and was last at 6.5872, compared to Friday’s close of 6.6124.
Investors are also adjusting positions ahead of economic data due from China on Tuesday, with copper prices expected to react according to the data releases tomorrow, said a Shanghai-based copper analyst.
Investors will be looking out to see if the improvement in December trade data seen last week will also be seen in other indicators.
China’s fourth quarter GDP is expected at 6.9 percent, December industrial production at six percent, December fixed asset investment at 10.2 percent and December retail sales at 11.3 percent.
In other data announced last Friday, Chinese data M2 money supply and new loans both undershot at 13.3 percent and 598 billion yuan respectively.
In the US, the Empire state manufacturing index dropped to -19.4, worse than expected. Capacity utilization rate and industrial rate also disappointed at 76.5 percent and -0.4 percent respectively.
US preliminary UoM consumer sentiment and business inventories were better than expected at 93.3 and -0.2 percent but preliminary UoM inflation expectations came lower than the forecast at 2.4 percent.
In other commodities, Brent and WTI crude prices both settled below $30 per barrel on Friday after sanctions on Iran were lifted, and oil production and export are expected to rise from the country.
Crude oil prices continues to fall during Asian trading hours with the WTI so far down 1.09 percent to $29.10 per barrel, and the Brent down 1.31 percent to $28.56 per barrel.
In equities, the Shanghai Composite was last at 2,895.514 on Monday, down 0.19 percent after closing 3.55 percent lower on Friday.
In other metals, the SHFE March aluminium rose 100 yuan to 10,750 yuan so far on Monday. The SHFE zinc contract for March delivery increased 150 yuan to 12,680 yuan, while the March lead contract rose 245 yuan to 12,830 yuan.
SHFE nickel for May delivery was 980 yuan higher at 69,170 yuan, while May tin jumped 1,650 yuan to 94,740 yuan so far on Monday.
On the London Metal Exchange, base metals were mostly higher during Asian trading hours on Monday on Select. Copper was $44 higher at $4,375 per tonne, with around 2,700 lots changing hands.
Aluminium was last at $1,476.50, a gain of $3.50, while zinc was up $12 to $1,488. Nickel was recently at $8,555 after rising $160, while lead is so far up $11.50 to $1,608.50. Tin is so far $100 down at $13,200.