LIVE FUTURES REPORT 05/09: Nickel leads SHFE complex lower; tin bucks trend

Base metals prices on the Shanghai Futures Exchange were mostly down during Asian morning trading on Wednesday September 5, with nickel leading the complex lower. Tin was the only metal record any gains.

Tensions between China and the United States continue to overshadow global markets, with sentiment in the base metals market taking a hit amid fears over an escalating trade war between the two.

“In general, the reason for this global weakness is still being attributed to fears over ever escalating global trade wars and the worry that [US] President Trump will make the ultimate move and apply tariffs to 100% of Chinese goods,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note.

With the escalating tensions comes fears of slowdowns in major economies, putting a halt to construction projects and therefore affecting demand for metals.

Fueling these fears was the recent weaker-than-expected Caixin purchasing managers’ index (PMI) data which showed China’s manufacturing growth slowed to a 14-month low of 50.6 in August, from 50.8 in July.

The weaker PMI reading ignited fears of a slowdown in China’s property sector, which is a major consumer of nickel metal.

As a result, the most-traded November nickel contract on the SHFE fell to 102,450 yuan ($14,985) per tonne as at 11.24am Shanghai time, down by 800 yuan per tonne from Tuesday’s close.

“Nickel in China is mainly consumed by the property sector. Now everyone is concerned as to whether demand from this sector can still support nickel prices after the economic data was weaker than we expected,” a Shanghai-based analyst said.

A stronger dollar added further downward pressure to base metals prices this morning. The dollar index stood at 95.36 as at 11.24 am Shanghai time, which compares with a reading of 94.70 at roughly the same time last Tuesday.

Base metal prices

  • The SHFE October copper contract moved down 430 yuan per tonne to 47,350 yuan per tonne.
  • The SHFE November aluminium contract dropped 120 yuan per tonne to 14,710 yuan per tonne.
  • The SHFE October zinc contract fell 420 yuan per tonne to 20,715 yuan per tonne.
  • The SHFE October lead contract slipped 105 yuan per tonne to 18,700 yuan per tonne.
  • The SHFE November nickel contract declined 800 yuan per tonne to 102,450 yuan per tonne.
  • The SHFE January tin contract increased 1,450 yuan per tonne to 145,150 yuan per tonne.

Currency moves and data releases

  • The dollar index was down by 0.08% at 95.34 as at 11.23am Shanghai time.
  • In other commodities, Brent crude oil was up 0.02 % at $77.83 per barrel as at 11.23 am Shanghai time.
  • In equities, the Shanghai Composite dropped 0.92 % to 2,725.26 as at 12.17 am Shanghai time.
  • In US data on Tuesday, the final manufacturing purchasing managers’ index (PMI) was at 54.7, while ISM manufacturing PMI stood at 61.3. Construction spending increased 0.1% month over month, while IBD/TIPP economic optimism was at 55.7.
  • The economic agenda is busy today with a host of services PMI data from Spain, Italy, France, United Kingdom and Germany.
  • The European Union’s retail sales and US trade balance are also due for release.