Singapore 13/09/2016 - Copper on the Shanghai Futures Exchange stayed supported during Asian trading hours on Tuesday following the release of upbeat Chinese economic data.
The most active SHFE November copper contract finished the morning session at 36,540 yuan, up 370 yuan from the previous day’s close. Close to 155,000 lots changed hands so far, with open interest at around 219,000 positions, down from 243,058 positions at Monday’s close.
Open interest has continued to decline during morning trading as shorts took profit after selling down the metal to a near two-week low on Monday.
The metal stayed in positive territory after Chinese industrial production, fixed asset investment and retail sales data released at 10am local time were close to or better than expected.
Chinese August industrial production rose 6.3 percent year-on-year in August, close to expectations of 6.2 percent and higher than July’s reading of six percent.
Fixed asset investment in January-August increased 8.1 percent year-on-year, besting forecast of 7.9 percent and was at the same level of growth as in January-July.
August retail sales growth at 10.6 percent year-on-year also beat forecast of 10.2 percent and July’s growth of 10.2 percent.
Main economic indicators have improved in August with the promotion of structural adjustment and faster growth in new modes of growth, the Chinese National Bureau of Statistics (NBS) said on Tuesday. The country is counting on the service sector to drive its economy as it makes a transition away from metal-intensive infrastructure projects towards a service-oriented economy.
“This was a strong set of data, showing improvement or stabilisation across all economic indicators,” Tom Rafferty, Asia economist at the Economist Intelligence Unit (EIU), said.
The property market is proving surprisingly resilient, as buyers step up purchases ahead of anticipated policy tightening, and this has acted to support the industrial sector and commodity prices, he said, adding that the automotive sector is also enjoying a strong run, with volume output increasing by nearly 25 percent in August.
“The data suggests that economic growth in the second half of 2016 will come in at a similar level to that achieved in the first half of the year. With growth comfortably within the government's targeted range for this year, this provides a perfect opportunity to push ahead on structural reform,” Rafferty said.
While the August data had surprised on the upside, the NBS cautioned that there remains uncertainty going forward.
The foundation for economic stabilisation is not solid with both the domestic and overseas environment remaining complex and challenging, alongside many uncertain and unstable factors, the NBS said.
The country will continue to push supply-side reforms, moderately expand demand and employ policies to stabilise growth, it added.
“We think that momentum behind the economy will fade in 2017, when the property market will be on a downward cycle and the automotive sector likely to be facing overcapacity issues,” EIU's Rafferty noted.
Other data due later on Tuesday includes the German ZEW economic sentiment and US NFIB small business index. European Central Bank president Mario Draghi is also set to speak in Trento, Italy later in the day.
In equities, the Shanghai Composite fell 0.18 percent to finish morning trading at 3,016.54 on Tuesday.
In currencies, the US dollar index rose 0.01 percent to 95.13 so far on Tuesday.
In other commodities, the Brent crude oil spot price fell 0.48 percent to $47.91 per barrel, and the Texas light sweet crude slipped 0.35 percent to $45.83 recently.
In other metals, the SHFE November aluminium contract rose 90 yuan to 12,050 yuan, and SHFE November zinc climbed 95 yuan to 17,815 yuan.
In aluminium data, Chinese aluminium production was almost flat, falling by a slight 0.8 percent year-on-year to 2.71 million tonnes in August, according to data from the NBS on Tuesday.
SHFE November lead increased 220 yuan to 14,040 yuan, and January nickel gained 400 yuan to 79,110 yuan. January tin was up 320 yuan to 122,190 yuan.
On the London Metal Exchange, most base metals stayed higher during Asian trading hours on Tuesday on Select after the release of the Chinese data. Copper rose $3.50 to $4,651, with around 1,250 lots changing hands.
Nickel was last at $10,090, up $10, and aluminium gained $3 to $1,571. Zinc increased $6 to $2,269, while lead slipped $1 to $1,881. Tin was up $50 to 19,100.