LIVE FUTURES REPORT 01/06: SHFE base metal prices consolidate; nickel leads on the upside

Nickel prices outperformed, tracking the recent strength of prices on the London Metal Exchange, while aluminium prices were supported by news that the United States will impose Section 232 tariffs of 25% on steel imports and 10% on aluminium imports from Canada, Mexico and the European Union.

The most-traded July nickel contract price on the SHFE stood at 117,480 yuan ($18,325) per tonne as at 10:47 am Shanghai time, up by 2,660 yuan per tonne from Thursday’s close.

Nickel’s consistent supply outflows are propping up prices, with upward moves further supported by the more enduring factors of strong stainless steel demand and electric vehicle developments.

Nickel stocks at London Metal Exchange warehouses have declined 21% since the beginning of the year, last at 290,604 tonnes on Thursday, compared with 366,612 tonnes on January 2. Meanwhile, nickel inventories at SHFE-listed sheds have declined by 34% since the start of 2018, falling from 48,920 tonnes on January 5 to 32,286 as at May 25.

Aluminium prices, meanwhile, have found support from the US’ imposition of tariffs against Canada, Mexico and the EU.

“The decision by President Trump to push ahead with tariffs on aluminium and steel imports into the US saw aluminium prices well supported. With the tariff unlikely to induce more US supply, prices are likely to push higher as the cost of imported aluminium rises,” ANZ Research noted on Friday.

But the renewed trade tensions have pressured other markets this morning, with participants becoming more cautious, putting a cap on gains in the other base metals prices.

Adding further pressure to the base metals was China’s softer-than-expected Caixin manufacturing purchasing managers’ index (PMI) release on Friday, which showed only modest expansion in China’s manufacturing sector in May.

The Caixin PMI came in at 51.1 for May, unchanged from April, but below an expected print of 51.3. A reading above 50 indicates expansion; a reading below signals contraction.

Base metals prices

• The SHFE July zinc contract price dipped 120 yuan per tonne to 24,300 yuan per tonne.
• The SHFE July copper contract price rose 80 yuan per tonne to 51,460 yuan per tonne.
• The SHFE July aluminium contract price edged up 25 yuan per tonne to 14,615 yuan per tonne.
• The SHFE July lead contract price gained 20 yuan per tonne to 19,960 yuan per tonne
• The SHFE September tin contract price inched up 280 yuan per tonne to 155,270 yuan per tonne

Currency moves and data releases

• The dollar index dipped 0.1% to 94.01 as at 10.47am Shanghai time.
• In other commodities, the Brent crude oil spot price was down 0.22% to $77.58 per barrel as at 12.17am Shanghai time.
• In equities, the Shanghai Composite was down 0.53 % to 3079.16 as at 12.35am Shanghai time.
• In US data on Thursday, personal income in the US increased $49.5 billion – or 0.3% – in April, in line with forecasts.
• The economic agenda is fairly busy today with a host of manufacturing PMI data out across Japan, Europe and the US. Other US data of note includes average hourly earnings, non-farm employment change and the unemployment rate.