LIVE FUTURES REPORT 08/08: SHFE base metals prices broadly positive; nickel rises 1.3%

The base metals maintained a general upward trajectory during morning trading, with investors’ confidence buoyed by a weaker dollar.

The dollar index, at 95.15 as at 10.37 am Shanghai time, continues to drift down toward the 95 mark. It had breached the level on Tuesday, dipping to a low of 94.99 before recovering slightly.

With the exception of aluminium (unchanged) and tin (-0.2%), the base metals were in positive territory this morning. Nickel led the advance with a 1.3% gain, while gains were more gradual in the rest of the complex.

The most-traded November nickel contract on the SHFE stood at 114,130 yuan ($16,692) per tonne as at 10.37am Shanghai time, up by 1,500 yuan per tonne from Tuesday’s close.

“[Price] increases were not exclusive to nickel – the other metals are rising too. But the complex has been consolidating with prices fluctuating for a while,” a Shanghai-based analyst told Metal Bulletin.

“For nickel, the demand/supply conflict is also there. It wouldn’t be surprising to see nickel prices soar given the low stock levels and the pickup in downstream demand,” the analyst added.

Nickel stocks on both the SHFE and London Metal Exchange have recorded considerable declines in stocks since the beginning of 2018. Nickel stocks at LME warehouses totaled 251,838 as of Tuesday, down by 31.5% from 367,776 tonnes on January 2.

Nickel inventories at SHFE-approved warehouses, meanwhile, have shown an even stronger decline; at 18,887 tonnes as of August 3, SHFE nickel stocks are down 61% from January 5.

“Underlying demand remains supportive too as world stainless steel melting production in the first three months of 2018 rose 9.5% year on year to 12.77 million tonnes, according to data from the International Stainless Steel Forum,” Metal Bulletin analyst Andy Farida said.

“Also, the data from the International Nickel Study Group reported that global refined nickel consumption had grown 9.7% so far in 2018, with Asia (+12.7%) leading the momentum, followed by Africa (+5.2%) and Europe (+2%),” Farida added.

Elsewhere, easing supply concerns in the aluminium market prevented light metal prices from registering any gains this morning, while copper prices continued to largely ignore ongoing labor issues at South American mines with only marginal increases.

Base metals prices

• The SHFE October aluminium contract was flat at 14,490 yuan per tonne.
• The SHFE October zinc contract rose 135 yuan per tonne to 21,525 yuan per tonne.
• The SHFE September lead contract climbed 215 yuan per tonne to 18,335 yuan per tonne.
• The SHFE September tin contract was down 270 yuan per tonne to 146,680 yuan per tonne.
• The SHFE October copper contract rose 20 yuan per tonne to 49,570 yuan per tonne.

Data releases and currency moves

• The dollar index edged down by 0.02% to 95.15 as at 10.37am Shanghai time.
• In other commodities, the Brent crude oil spot price was up by 0.17% to $74.57 per barrel as at 10.37am Shanghai.
• In equities, the Shanghai Composite dipped 0.29% to 2,771.44 as at 10.49am Shanghai time.
• In US data on Tuesday, the IBD/TIPP economic optimism index came in higher than expected at 58, up from the previous figure of 56.4 and indicative of optimism in the US economy.
• Elsewhere, EU data on Tuesday showed the French trade deficit at €6.2 billion ($7.2 billion), making it the largest trade deficit the country has experienced since February 2017.
• In data today, China’s trade balance and US crude oil inventories are due.