LIVE FUTURES REPORT 01/11: Nickel above $13,000/t on EV optimism; base metals complex up

The three-month nickel price was trading above $13,000 per tonne for the first time since June 2015 on optimism surrounding the metal’s prospects in the electric vehicle (EV) sector.

EVs have been a hot topic at this year’s LME Week, which has lead to a significant rally in prices; it also surged on the SHFE this morning.

“Nickel led the sector higher … as the market becomes increasingly confident about its place in the electric car movement. Producers and traders speaking at LME Week have all spoken positively about the growth in demand expected from this sector,” ANZ Research noted.

“Trafigura estimates that demand for nickel sulphate will double by 2030 as a result,” it added.

Copper prices also followed higher on increasingly positive sentiment – the three-month price was most recently trading $148.50 per tonne higher at $6,802 at 11:21 GMT, while it looks to break back through the $7,000 per tonne mark.

“Yesterday saw the Codelco Chairman suggest prices could trade over $10,000 on the 2018 deficit and steady Chinese demand. Then [there were] overnight reports that Freeport are looking to lower TC/RCs on the back of the tight semi-processed market,” noted Marex Spectron.

Meanwhile, the other base metals have been broadly supported by steady data coming out of China this morning. China’s Caixin manufacturing purchasing managers’ index (PMI) for October came in at 51, meeting expectations and flat with the previous reading.

Aluminium prices continue to be supported by nearing winter capacity cuts in China, which are due to begin in mid-November.

Turnover on the exchange has been significantly higher across the complex this morning, “copper in particular has already seen 8,800 lots trade by 07:45, +140% on the 20-day average. The mood emanating from LME Week is certainly bullish given the positive macro-picture,” Marex added.

Nickel hikes

• The three-month price was most recently at $13,005 per tonne, an increase of $710.
• Stocks declined 462 tonnes to 381,444 tonnes.
• Nickel consumption in EV batteries is forecast to rise to about 220,000 tonnes in 2025 from 40,000 tonnes in 2016, Wood Mackenzie principal analyst, Sean Mulshaw, said in a report last week.
• Moreover, the Chinese government has ordered nickel pig iron (NPI) producers in the country’s Shandong province to cut capacity from mid-November to mid-March 2018 to alleviate pollution.
• Shandong Xinhai Technology, China’s largest NPI-only producer, is one such producer that has been ordered to halve production during the four-month period, which could remove around 200,000-250,000 tonnes of NPI from the market over the four month period, Metal Bulletin understands.
• Nickel ore production at PT Aneka Tambang (Antam) surged 318% year-on-year in the third quarter, after the Indonesian state-owned miner received approval to export low-grade nickel ore earlier this year.

Base metals prices higher

• The three-month copper price was up $148.50 to $6,987.50 per tonne. Stocks declined 950 tonnes to 273,675 tonnes.
• Aluminium’s three-month price was up $34.50 to $2,194.50 per tonne. Inventories fell 2,250 tonnes to 1,186,450 tonnes.
• The three-month zinc price was up $31.50 to $3,296.50 per tonne. Stocks fell 3,125 tonnes to 254,025 tonnes.
• Lead’s three-month price was $46.50 higher at $2,460.50 per tonne. Inventories dipped 225 tonnes to 149,250 tonnes.
• The three-month tin price was up $175 to $19,550 per tonne. Stocks were unchanged at 2,095 tonnes.

Currency moves and data releases

• The dollar index was up 0.12% to 94.65.
• In other commodities, the Brent crude oil spot price was up 0.93% to $61.60 per barrel.
• The economic agenda is busy once more today with manufacturing PMI data out across Japan, the United Kingdom and the United States. Other US data of note includes the ADP non-farm employment change, construction spending, crude oil inventories and total vehicle sales.
• In addition, the US Federal Open Market Committee’s two-day meeting will conclude today and while the Fed is not expected to make any changes to the benchmark interest rate, investors will be paying close attention to the release of the statement because it could point the market toward a rate increase at the Fed’s December meeting.
• Indeed, 98.2% of market participants expect that the Fed will raise rates to between 1.25% and 1.5% in December, according to the CME Group’s FedWatch tool.