LIVE FUTURES REPORT 05/02: SHFE base metals prices weaken amid risk-off tone; tin bucks the trend

Nickel prices led on the downside, with follow-through weakness evident in Asia this morning after a slump in the London Metal Exchange’s three-month nickel price last Friday.

The SHFE’s most-traded May nickel contract fell to 101,280 yuan ($16,063) per tonne as of 10.20am Shanghai time, down by 3.1% or 3,250 yuan per tonne from the close on Friday.

This follows a slide in LME nickel prices on Friday, where the three-month price closed the 5pm official session $570 lower at $13,430 per tonne.

A firmer dollar has also put downward pressure on nickel prices, with the currency steadying following the release of a strong US jobs report at the end of last week.

In data on Friday, the US non-farm employment change in January rose to 200,000, comfortably above the forecast of 181,000. Average hourly earnings increased by 0.3%, while the headline unemployment rate was stable at 4.1%.

The firm data further subdued investor appetite for commodities, with a wave of risk-off pervading the market.

“However, weaker fundamentals also played their part. Indonesian nickel producer, PT Aneka Tambang reported its 2017 output of nickel ore was up 285% year on year to 2.8 million tonnes. This raised fears that additional ore will be exported to China to feed its nickel pig iron smelters,” ANZ Research said on Monday.

“Nickel refuses to lie down with every and any dip representing a buying opportunity… causing market makers some headaches as they sell the lows and buy the highs,” Marex Spectron noted.

“The nickel price doesn’t know what it is doing, it is volatile and cannot sustain at any level at the moment it seems. The crash comes quick and all too often,” a trader added.

The rest of the SHFE base metals complex was broadly lower this morning, with only tin managing to push into positive territory.

Base metals prices

• The SHFE May copper was 570 yuan lower at 52,950 yuan per tonne.
• The SHFE March aluminium contract fell by 70 yuan to 14,320 yuan.
• The SHFE February zinc declined by 115 yuan to 26,735 yuan per tonne.
• The SHFE March lead was down by 40 yuan to 19,620 yuan per tonne.
• The SHFE May tin price rose by 520 yuan to 149,210 yuan per tonne.

Currency moves and data releases

• The dollar index was down by 0.24% at 89.11 as of 11.30am Shanghai time, but the currency continues to move away from recent lows – the low being 88.43 on January 25.
• In other commodities, the Brent crude oil spot price was down by 0.42% to $67.80 per barrel and the Texas light sweet crude oil spot price decreased by 0.32% to $64.71.
• In equities, the Shanghai Composite was down by 0.18% to 3,455.90.
• In data today, China’s Caixin services purchasing managers’ index (PMI) was better than expected at 54.7 in January, this compares with forecast and previous readings of 53.6 and 53.9 respectively.
• Later, we have the ISM non-manufacturing PMI from the United States as well as the United Kingdom and European Union’s services PMI of note.
• In addition, European Central Bank president Mario Draghi is speaking.