LIVE FUTURES REPORT 02/02: SHFE base metals prices broadly higher; nickel leads the charge

The most-traded SHFE May nickel contract price rose to 105,060 yuan ($16,684) per tonne as of 10.00 am Shanghai time, up by 2,970 yuan or 2.9% compared with the previous session’s close of 102,090 yuan per tonne.

On Thursday, the three-month nickel on the LME ended ring trading $400 higher to close at $14,000 per tonne for the first time since May 2015.

But the three-month nickel price has been volatile in recent weeks: the last time it reached a new 2018 high, it plummeted $455 per tonne at the close on the following day (January 30).

Supply concerns in the global nickel full plate market for the year ahead continue to draw the attention of the market, boosting optimism surrounding the price of nickel, according to Metal Bulletin senior nickel analyst Ellie Wang.

“Top refined nickel producers have put more investment into nickel sulfate due to its higher profitability and the optimism surrounding its use in the downstream battery sector. The greater nickel sulfate production will impede production of refined nickel due to the tightened availability of nickel sulfate concentrate,” Wang said.

Nickel stocks, including full plates and briquettes, at LME warehouses stood at 355,266 tonnes as of January 31, down 9% from 389,154 tonnes on August 30, 2017, with nickel full plates comprising only 20% of the 355,266-tonne total.

In supply news, Glencore has set its 2018 production guidance for own-sourced nickel at 127,000-137,000 tonnes of nickel metal, much higher than it produced in 2017.

Meanwhile, the SHFE March lead contract price rose by 115 yuan or 0.6% to 19,685 yuan per tonne, with the metal also benefiting from supply concerns.

Supply is said to have tightened in recent weeks amid lower operating rates among Chinese lead miners and smelters in winter due to the strict environmental inspections aimed at curbing pollution during the period.

In addition, elevated demand due to the upcoming Chinese New Year holidays (February 15-21) has also lent support to prices.

“Users of lead ingots have bought more material in recent weeks to stock up before the holiday period,” a lead trader based in Zhejiang said.

Tin down, other base metals up

• The SHFE May tin contract price eased 350 yuan or 0.2% to 148,920 yuan per tonne.
• The SHFE March copper contract edged up 60 yuan or 0.1% to 53,040 yuan per tonne.
• The SHFE March zinc contract price increased 80 yuan or 0.3% to 26,750 yuan per tonne.
• The SHFE March aluminium contract price increased 30 yuan or 0.2% to 14,365 yuan per tonne.

Currency moves and data releases

• The dollar index increased by 0.15% to 88.75 as of 11.05 am Shanghai time – the recent low was 88.43 on January 25.
• In other commodities, the Brent crude oil spot price was up by 0.15% at $69.86 per barrel as of 11.06 am Shanghai time.
• In equities, the Shanghai Composite was down by 0.04% at 3,445.68 as of 11.06 am Shanghai time.
• In data on Thursday, China’s Caixin PMI was in line with expectations at 51.5.
• In the United States, challenger jobs cuts were down 2.8% year on year, while weekly unemployment claims stood at 230,000. Final manufacturing PMI and ISM Manufacturing PMI came in at 55.5 and 59.1 respectively.
• Today, we have UK construction PMI, EU producer prices and a raft of US data that includes average hourly earnings, non-farm employment change, unemployment rate, revised University of Michigan consumer sentiment and inflation expectations and monthly factory orders.
• In addition, US Federal Open Market Committee member John Williams is speaking.