LIVE FUTURES REPORT 07/08: SHFE base metals prices consolidate; nickel outperforms with 1.7% gain

Base metals prices on the Shanghai Futures Exchange were mostly up during morning trading on Tuesday August 7, with nickel outperforming the rest of the complex with a gain of 1.7%.

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

  • The SHFE September aluminium contract increased 30 yuan per tonne to 14,425 yuan per tonne.
  • The SHFE October zinc contract rose 30 yuan per tonne to 21,315 yuan per tonne.
  • The SHFE September lead contract climbed 245 yuan per tonne to 18,085 yuan per tonne.
  • The SHFE September tin contract was up 70 yuan per tonne to 146,080 yuan per tonne.
  • The SHFE October copper contract went down 70 yuan per tonne to 49,300 yuan per tonne.

Data releases and currency moves

  • The dollar index edged down by 0.02% to 95.32 as at 10.11am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.04% to $73.62 per barrel as at 10.11am Shanghai.
  • In equities, the Shanghai Composite rose 0.36% to 2,714.91 as at 10.44am Shanghai time.
  • The European Union’s Sentix investor confidence beat expectations with a print of 14.7 – 12.8 had been called for.
  • It is another light day for data on Tuesday with the German and French trade balances, the United Kingdom’s Halifax house price index and US releases that include Jolts job openings, IBD/TIPP economic optimism and consumer credit of note.