LIVE FUTURES REPORT 07/02: Nickel leads the recovery in SHFE base metals; lead prices buck the trend

Most base metals traded on the Shanghai Futures Exchange were in positive territory during Asian morning trading on Wednesday February 7, with only lead prices weakening.

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Nickel led the gains with a 1.6% rise amid a healthy demand picture and a recovery in the US stock markets, which helped ease the risk-off tone which had pervaded the market earlier this week.

The most-traded May nickel contract on the SHFE stood at 102,880 as of 10.21 am Shanghai time, up by 1,620 yuan per tonne from the previous session’s close.

Declining stock levels and expectations of firmer demand are painting a brighter picture for nickel’s fundamentals, lending support to prices.

Nickel stocks on the London Metal Exchange have fallen for eleven consecutive days with the total decline for the period at 13,700 tonnes. Stocks on the LME stood at 349,476 tonnes on Tuesday after a 1,176-tonne during the day.

“When the demand improves after Chinese New Year holidays (February 15-21), the fall in LME nickel inventories will speed up,” an analyst at Galaxy Futures said.

In addition, the rebound in the US stock market on Tuesday also helped to ease the risk-off tone in commodity markets, benefiting the base metals complex in general.

The Dow Jones industrial average gained 567 points, or 2.3%, recouping nearly half of the 1175-point plunge it took on Monday. The Standard & Poor's 500 Index rose 46 points, or 1.7%, to 2695. The Nasdaq climbed 148, or 2.1%, to 7115.

Yet given the volatility seen in nickel prices over the past week, the metal remains relatively risky and investors will likely remain cautious.

“Trading at an elevated price and an overstretched net long fund position, LME nickel is the weakest link among the base metals complex,” Metal Bulletin Research analyst Andy Farida said.

“After all, nickel has gained its notoriety for being a volatile metal since its price easily fluctuates in opposite directions,” he added.

Base metals prices

  • The SHFE March copper contract rose by 360 yuan to 53,110 yuan per tonne.
  • The SHFE March aluminium contract was up by 125 yuan to 14,265 yuan per tonne.
  • The SHFE March zinc inched up by 95 yuan to 26,650 yuan per tonne.
  • The SHFE May tin price increased by 1,700 yuan to 151,700 yuan per tonne.
  • The SHFE March lead fell by 165 yuan to 19,300 yuan per tonne.

Currency moves and data releases

  • The dollar index was down by 0.08% at 89.60 as of 11.30am Shanghai time.
  • In other commodities, the Brent crude oil spot price increased 0.36% to $67.43 per barrel, and the Texas light sweet crude oil spot price was up 0.22% to $64.02.
  • In equities, the Shanghai Composite was down 0.81% to 3,343.44.
  • In data on Tuesday, Jolts job openings in the United States in December came in below expectations at 5.81 million, while IBD/TIPP economic optimism exceeded expectations with a reading of 56.7.
  • In data today, we have German industrial production, French trade balance, the UK’s Halifax house price index, Italian retail sales as well as crude oil inventories from the US.
  • In addition, US Federal Open Market Committee member William Dudley is speaking.

LME snapshot at 02.20 am London time
Latest three-month LME Prices
  Price ($ per tonne)  Change since yesterday's close ($)
Copper 7,157 81
Aluminium 2,204 34
Lead 2,609.50 -11.5
Zinc 3,504.50 47.5
Tin 21,860 135
Nickel 13,690 305
SHFE snapshot at 10.21 am Shanghai time
Most-traded SHFE contracts
  Price (yuan per tonne)  Change since yesterday's close (yuan)
Copper  53,110 360
Aluminium 14,265 125
Zinc 26,650 95
Lead 19,300 -165
Tin  151,700 1,700
Nickel  102,880 1,620

Changjiang spot snapshot on February 7
  Range (yuan per tonne)  Change (yuan)
Copper  52,870—52,890 260
Aluminium 14,060—14,100 -20
Zinc 26,580—27,380 30
Lead 19,250—19,450 -150
Tin  148,500—151,500 1,250
Nickel  102,050—102,450 1,550

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