LIVE FUTURES REPORT 26/04: SHFE nickel prices shrug off firm dollar; rest mixed

The most-traded June nickel contract on the SHFE stood at 98,350 yuan ($14,594) per tonne as at 10.22am Shanghai time on Friday, up by 0.7% or 650 yuan per tonne from Thursday’s close of 97,700 yuan per tonne.

The positive performance in nickel comes despite a strengthening US dollar, which is weighing on the rest of the SHFE base metals this morning.

The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was little changed from its close on Thursday at 98.14 as at 10.22am Shanghai time. The index had reached a high of 98.34 on Thursday – its highest since May 2017.

The currency was supported by the overnight release of a healthy US durable goods orders reading for March; US orders for long-lasting manufactured goods rebounded sharply in March with an increase of 2.7% on a monthly basis, easily surpassing market expectations for an increase of 0.8%.

Yet with other major US data scheduled for Friday – see other highlights below – investors will likely be wary of the fact that any further stronger-than-expected releases could propel the US currency higher.

In terms of nickel, this morning’s strength could be a response to the metal becoming oversold following weakness throughout this week, but the strong dollar and challenging fundamental backdrop should continue to cap the upside in nickel prices.

“Its fundamental backdrop has become less price supportive too; the latest data from the International Nickel Study Group (INSG) showed that the global refined nickel market stood in a deficit of 5,700 tonnes in the first two months of 2019, a contraction from 2018’s deficit of 24,400 tonnes,” Fastmarkets analyst Andy Farida said.

“Strong global mine output has translated into higher refined output and as a result, we are starting to see supply deficit shrink. INSG also reported that so far in 2019, total refined output has risen by 6.8% but metal usage enjoyed only a mild 1.4% increase,” Farida added.

Other highlights

• Copper was the biggest loser of the SHFE base metals on Friday morning, with the metal’s most-traded June contract sliding 0.7% or 320 yuan per tonne to 48,860 yuan per tonne as at 10.22am Shanghai time.
• The Shanghai Composite Index declined by 0.78% to 3,099.36 as at 10.19 am Shanghai time.
• In US data on Thursday, unemployment claims rose more than expected to 230,000 in the week ended April 20 – a reading of 199,000 had been forecast.
• In data on Friday, the Tokyo core consumer price index rose more than expected with a 1.3% gain in April, beating the forecast 1.1% increase. Japanese preliminary industrial production disappointed in March with a 0.9% decline versus the expected 0.1% uptick.
• Later, market focus will turn to the advanced reading of first quarter gross domestic product growth in the United States. The US economy is expected to have grown at a pace of 2.2% in the first three months of 2019.