LIVE FUTURES REPORT 09/07: SHFE base metals prices broadly lower on dollar strength; nickel bucks trend

Base metals prices on the Shanghai Futures Exchange were mostly down during morning trading on Tuesday July 9 amid risk-off sentiment and US dollar strength.

The dollar index rose by 0.03 to 97.39 as at 9.54 am Shanghai time, sending risk-off sentiment into the markets and dampening investors’ appetite. Weak German economic data released yesterday also dampened overall investor enthusiasm.

“German industrial production lifted 0.3% month on month in May – a touch below market expectations of 0.4%,” according to ANZ Research.

“That, together with April’s exceptionally weak 2.0% month-on-month fall, paints a pretty soft picture for Q2 GDP growth” ANZ Research added.

Nickel shrugged off the negative mood, and was the best performer during  the morning trading session, with the most-traded August nickel contract on the SHFE rising by 170 yuan per tonne ($25) – or 0.2% – from Monday’s close to 100,500 yuan per tonne as of 9.54 am Shanghai time.

Nickel’s upward price action may have been in reaction to news of an earthquake on the Indonesian island of Sulawesi, where Chinese investment firm Tsingshan runs its 50,000 tonne per year Morowali nickel production plant.

“The earthquake news supported the nickel price, but [the earthquake] in fact hasn’t affect the nickel production in Indonesia at least for the moment, and nickel price is in fluctuation,” according to Citic Futures’ morning notes.

Nickel prices were also being supported by dwindling stocks in both London Metals Exchange and SHFE warehouses. LME nickel stocks stood at 154,740 tonnes on Monday July 8, hitting a seven-year low, while SHFE stocks stood at 20,511 tonnes on Friday July 5, down by 33% year on year. 

Other highlights
• The most-traded August aluminium contract price dropped to 13,730 yuan per tonne as at 9.54am Shanghai time, down by 40 yuan per tonne from Monday’s close.
• In data today, Federal Reserve Chair Jerome Powell is speaking and Canadian Consumer Price Index numbers are due out.