LIVE FUTURES REPORT 18/05: SHFE base metals broadly higher; aluminium bucks trend on huge LME re-warranting

The most-active July nickel contract on the SHFE traded at 109,540 yuan ($17,203) per tonne as at 10.38am Shanghai time, up 1,720 yuan per tonne from Thursday’s close. Around 575,000 lots of the contract have changed hands so far this morning.

The recent strength in nickel prices is due to an improvement in stainless steel sales and prices, while the digestion of inventories continues in the market, China’s Galaxy Futures said in a note late Thursday.

Nickel inventories on the London Metal Exchange have fallen on consecutive days since May 4. Overall nickel stocks were at 306,054 tonnes on Thursday, down around 8,800 tonnes since May 4. Nickel inventories in SHFE warehouses decreased 3,713 tonnes over the week to 35,621 tonnes on May 11.

The nickel market also remains positive on the medium- to long-term outlook for electric vehicle batteries, China’s Guotai Junan Futures said on Friday.

Nickel demand from electric vehicles is expected to surge ten-fold to 350,000-500,000 tonnes by 2025 from 36,000 tonnes in 2018, Robert Morris, Vale’s executive vice president of sales and marketing for base metals, forecasted. 

Meanwhile, SHFE aluminium prices came under pressure on Friday after overnight LME data showed that more than 138,000 tonnes of the light metal were re-warranted at Port Klang in Malaysia – this was the largest of the year for aluminium which prompted the metal’s LME three-month price to dip to a daily low of $2,248.50 per tonne on Thursday, the lowest since May 2.

While heat has been taken out of the aluminium market after the United States eased sanctions on Rusal by giving more time for Oleg Deripaska to relinquish control of Rusal and for third parties to wind down existing contracts, supply disruption risks remain high, ANZ Research said on Friday.

“The process of vetting any new owner of Rusal could extend well into next year. This is likely to create an uncertain period for the industry and is likely to hinder trade,” the bank said. “As such, we don’t expect to see aluminium prices fall back to pre-US sanction levels. In fact, the fundamental backdrop suggests the risks to prices remain on the upside.”

Base metals prices

• The SHFE July aluminium contract price decreased 85 yuan per tonne to 14,800 yuan per tonne.
• The SHFE July copper contract price increased 220 yuan per tonne to 51,270 yuan per tonne.
• The SHFE June lead contract price rose 155 yuan per tonne to 19,565 yuan per tonne.
• The SHFE July zinc contract price gained 125 yuan per tonne to 23,695 yuan per tonne.
• The SHFE September tin contract price slipped 1,060 yuan to 144,880 yuan per tonne.

Currency moves and data releases

• The US dollar index was at 93.46 as at 10.34am Shanghai time, down 0.03% from its previous closing price. The index has eased after hitting as high as 93.64 on Wednesday, the highest since December 19, 2017.
• In other commodities, the Brent crude oil spot price rose 0.07% to $79.56 per barrel as at 10.34am Shanghai.
• In equities, the Shanghai Composite rose 0.17% to 3,159.64 as at 10.32 am Shanghai time.
• In Chinese data released on Thursday, foreign direct investment rose 0.1% in January-April, a slower growth than the 0.5% in the first three months of the year.
• In US data released on Thursday, weekly unemployment claims came in at 222,000, above expectations of 216,000, while the Philly Fed manufacturing index for May at 34.4 bested forecast of 21.1.
• No major US economic data is due today.