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The base metals seem content to consolidate with a slightly upward bias, with investors in no hurry to chase prices higher against the backdrop of heightened global trade tensions.
A firm dollar has also kept a cap on any gains in the complex; the dollar index, recently at 95.32, remains in relatively high ground, and is up from a low of 95.20 on Monday.
Nickel’s stronger performance this morning has been underpinned by declining stock levels, which continue to compound a broadly bullish environment for the metal.
The most-traded November nickel contract on the SHFE stood at 112,490 yuan ($16,426) per tonne as at 10.11am Shanghai time, up by 1,890 yuan per tonne from Monday’s close.
“The rise in SHFE nickel prices today is not that dramatic, given it has declined considerably in the past week, it seems like a quick correction,” a Shanghai-based analyst told Metal Bulletin.
The front month nickel contract price on the SHFE fell 2.2% to 109,500 yuan per tonne in the week ended August 3.
“Also, the effect of dwindling nickel stocks in SHFE and [London Metal Exchange warehouses] is manifesting in today’s nickel performance. [Prices] should’ve gone up a while back,” the analyst added.
Nickel stocks on the SHFE have largely declined since the beginning of the year, with stocks totaling 18,887 tonnes as of August 3, down by 30,033 tonnes or 61% from 48,920 tonnes on January 5.
LME nickel stocks have undergone a similar trend; nickel stocks at LME warehouses totaled 251,838 as of Monday, down by 114,774 tonnes or 31% from 366,612 tonnes on January 2.
Elsewhere, copper bucked the general show of strength from the SHFE base metals complex to dip 70 yuan per tonne so far this morning. The weakness comes despite ongoing labor unrest in South America, including a strike at the world’s largest copper mine by production, Escondida.
“Ongoing concerns about the impact of the trade conflict between US and China continues to weigh on sentiment. This has seen copper fall over 16% over the past two months. This comes despite threats of supply disruptions in Chile,” ANZ Research noted on Tuesday.
Base metals prices
Data releases and currency moves