Commodities: Base metals, oil futures post uptick as China slowdown fears ease

Government data indicated that China’s manufacturing sector remained in contraction territory in September, but stimulus measures Beijing has implemented over the last couple of months are beginning to pay dividends. Figures suggest the country’s factory output improved slightly, edging up to 49.8 from a three-year low of 49.7 recorded in August but below the 50 threshold that indicates expansion for the second consecutive month.

The reading was marginally above the 49.7-level analysts had expected. The sub-index tracking new orders rose from 49.7 to 50.2, while output sub-index improved from 51.7 to 52.3 easing market concerns.

At 1452 BST, the Brent front-month futures contract was trading 2.75% or $1.33 higher at $49.70 a barrel reversing losses posted stateside on Wednesday. Concurrently, the WTI was up 3.86% or 15 $1.74 at $46.83 a barrel.

Analysts at Barclays expect a moderation in Chinese oil demand growth over the fourth quarter, but not a slump as feared by some, as opportunistic storage-linked buying by Beijing “to fill commercial and strategic reserves could still provide support” to the oil price.

Copper futures recovery run continued in the face of production cuts, from a six-year low of $4,955.00 per metric tonne on Tuesday, to $5,166.50 past the midway point of Thursday trading, up 1.7% intraday, on the London Metal Exchange.

Major LME three-month futures contracts were also in positive territory, including primary aluminium (up 1.0%), lead (up 0.2%), nickel (up 3.5%), tin (up 0.5%) and zinc (up 1.3%). Analysts at Macquarie believe, in the near term, given China’s ever more prominent push to support growth, the market may see “a period of upside demand surprise, with copper having potential to outperform industrial metals peers.”

Elsewhere, precious metals trading remained lacklustre with a modest uptick in prices. COMEX gold for December delivery was up 0.15% or $1.70 at $1,116.90 an ounce, while spot gold was 0.25% or $2.76 higher at $1,117.85 an ounce.

Spot platinum was $7.84 or 0.86% higher at $915.09 an ounce, while COMEX silver was 0.39% or six cents higher at $14.68 an ounce.

Finally, headline agricultural commodities futures were largely in positive territory. CBOT corn (up 0.71%), wheat (up 0.98%), ICE cocoa (up 0.13%) and CME live cattle (up 0.71%) futures were trading higher. However, ICE cotton (down 0.31%) futures took a marginal knock.