LIVE FUTURES REPORT 01/11: SHFE base metals prices up across the board; nickel surges on EV prospects

Base metals prices on the Shanghai Futures Exchange were broadly higher during Asian morning trading on Wednesday November 01, supported by steady Chinese data. Nickel was the star performer with its most-traded contract hitting its upper limit early in the session on optimism surrounding the metal’s prospects in the electric vehicle (EV) sector.

The SHFE’s most-traded January nickel contract hit its daily upper limit at 99,340 yuan ($14,975) per tonne as of 02:02 GMT, up by 4.3% or 4,130 yuan compared with the previous session’s close.

Meanwhile, the February and March nickel contracts on the SHFE also reached their daily upper limit earlier in the session at 99,980 yuan per tonne and 99,240 yuan per tonne, respectively.

This follows a rally in the three-month nickel price on the London Metal Exchange overnight.

The LME’s three-month nickel contract closed at $12,405 per tonne on Tuesday, an increase of $645 compared with the previous session’s close.

The strong gains come amid increasing optimism towards nickel’s prospects in the EV battery sector.

“Nickel led the sector higher … as the market becomes increasingly confident about its place in the electric car movement. … Producers and traders speaking at the 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.

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.

Meanwhile, the other base metals have been broadly supported by steady data 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.

The reading signaled a marginal improvement in manufacturing operating conditions across China, a Shanghai-based base metals analyst said.

Base metals prices

  • The SHFE December copper price rose by 540 yuan to 54,360 yuan per tonne
  • The SHFE December Aluminium price climbed by 85 yuan to 16,350 yuan per tonne.
  • The SHFE December lead price rose by 200 yuan to 18,810 yuan per tonne.
  • The SHFE December zinc price strengthened by 300 yuan to 26,435 yuan per tonne.
  • The SHFE January tin price increased by 460 yuan to 144,140 yuan per tonne.

Currency moves and data releases

  • The dollar index was up by 0.1% to 94.67 as of 02:50 GMT – below its peak of 95.15 reached on October 27, which was the highest since July 20.
  • In other commodities, the Brent crude oil spot price rose by 0.11% to $61.13 per barrel and the Texas light sweet crude oil spot price rose by 0.04% to $54.59 per barrel.
  • In US data on Tuesday, the S&P/CS composite-20 house price index in August at 5.9% was above the forecast of 5.8%. The employment cost index was in line with expectations at 0.7%. CB consumer confidence for October was also impressive with a 125.9 reading, compared with an expected print of 121.1.
  • 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 as it could point the market towards 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 CME Group’s FedWatch tool.

LME snapshot at 0240 London time
Latest 3M  LME Prices
  Price ($/t)  Change since yesterday’s close ($)
Copper 6,955 93
Aluminium 2,183 17
Lead 2,461 37
Zinc 3,290.5 27.5
Tin 19,430 -15
Nickel 12,580 175

SHFE snapshot at 0303 London time
Most traded SHFE contracts
  Price (yuan/t)  Change since yesterday’s close (yuan)
Copper  54,360 540
Aluminium 16,350 85
Lead 18,810 200
Zinc 26,435 300
Tin 144,140 460
Nickel 99,340 4,130

Changjiang spot snapshot on November 1
  Range (yuan/t)  Change (yuan)
Copper  54,630-54,650 900
Aluminium 16,100-16,140 30
Zinc 26,750-27,550 450
Lead 18,800-19,000 250
Tin  142,500-144,500 500
Nickel  100,200-100,400 6,100
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