LIVE FUTURES REPORT 08/03: Weakness in SHFE base metals continues; nickel prices most resilient

The general weaker tone seen in the base metals traded on the Shanghai Futures Exchange throughout the week continued during Asian morning trading on Thursday March 8, with only nickel prices managing to post any gains.

The most-traded July nickel contract on the SHFE increased to 102,800 yuan ($16,254) per tonne as of 10.00am Shanghai time, up by 260 yuan or 0.3% from the previous day’s close of 102,540 yuan per tonne.

A firmer dollar and geopolitical concerns over a potential trade war have led to weakness in most of the base metals on the SHFE this morning, the exception being nickel which is likely receiving support from the bullishness surrounding the metal’s usage in the electric vehicle (EV) sector.

“Growth in electric vehicles is likely to support the nickel market,” Metal Bulletin analyst William Adams said.

“It received a further boost on Monday after Chinese Premier Li Keqiang said buyers should continue to enjoy tax subsidy schemes and non-cash incentives. This is likely to boost sales of new EVs after sales of 777,000 units in 2017,” Adams added.

According to the China Association of Automobile Manufacturers, Beijing’s support for the sector is likely to push sales in 2018 above 1 million units. More than 40% of high-grade nickel, the very raw material for stainless steel, may be used in batteries by 2025, according to Nornickel.

The rest of the SHFE base metals succumbed to follow-through weakness in the early trading session today after base metals prices on the London Metal Exchange slumped overnight, with uncertainty stemming from the latest developments over the United States’ Section 232 probe sparking a sell-off in the complex.

Other metals lower

  • The SHFE May copper contract price decreased 150 yuan or 0.3% to 52,330 yuan per tonne.
  • The SHFE April lead contract price slipped 170 yuan or 0.9% to 18,545 yuan per tonne.
  • The SHFE May zinc contract inched 45 yuan or 0.2% lower to 25,255 yuan per tonne.
  • The SHFE May aluminium contract decreased 65 yuan or 0.5% to 14,195 yuan per tonne.
  • The SHFE May tin contract price decreased 260 yuan or 0.2% to 146,320 yuan per tonne.

Currency moves and data releases

  • The dollar index was little changed at 89.61 as of 10.16am Shanghai time.
  • In other commodities, the Brent crude oil spot price was down 0.25% to $64.51 per barrel as of 10.16am Shanghai time.
  • In equities, the Shanghai Composite was up by 0.06% to 3,273.39 as of 10.16am Shanghai time.
  • In a busy day for data yesterday, the US ADP non-farm employment change, a preview of Friday’s jobs report, was above expectations at 235,000. The US trade deficit grew to $56.6 billion, while productivity was flat and labor costs rose 2.5%.
  • In data today, we have China’s trade balance, EU minimum bid rate, a European Central Bank press conference and US unemployment claims of note.

LME snapshot at 02.00am London time
Latest three-month LME Prices
Price ($ per tonne)  Change since yesterday’s close ($)
Copper 6,942.5 -7.5
Aluminium 2,102 5
Lead 2,394.5 19.5
Zinc 3,280 20
Tin 21,390 15
Nickel 13,510 -80

SHFE snapshot at 10.00am Shanghai time
Most-traded SHFE contracts
Price (yuan per tonne)  Change since yesterday’s close (yuan)
Copper (May) 52,330 -150
Aluminium (May) 14,195 -65
Zinc (May) 25,255 -45
Lead (April) 18,545 -170
Tin (May) 146,320 -260
Nickel (July) 102,800 260

Changjiang spot snapshot on March 8
Range (yuan per tonne)  Change (yuan)
Copper  51,780-51,800 -170
Aluminium 13,910-13,950 -140
Zinc 25,310-26,100 -210
Lead 18,550-18,750 -150
Tin  144,500-146,500 -250
Nickel  101,000-102,050 -725