LIVE FUTURES REPORT 10/03: SHFE base metals prices rebound after Monday’s weakness; Ni climbs 4.6%

Base metals prices on the Shanghai Futures Exchange were up across the board at the close of morning trading on Tuesday March 10, with the complex rebounding after a dramatic fall in oil prices and significant losses in global equities on Monday.

A freefall in oil prices amid reports of an oil price war between major exporters Russia and Saudi Arabia coupled with mounting cases of the novel coronavirus (2019-nCoV) around the world triggered huge losses in US stocks overnight.

“The collapse in oil prices and associated credit concerns for producers has added another negative layer to a market already on its knees over the [coronavirus] outbreak. Russia and Saudi Arabia’s pledge to flood the market with cheap oil triggered a sharp decline in oil prices during yesterday’s [Asia Pacific] session, triggering a huge sell-off in energy shares overnight with main European and US equity indices down between 6% and 8%,” Rodrigo Catril, currency strategist at the National Australia Bank, said on Tuesday.

The Dow Jones Industrial Average dropped by 2,013.76 points, or 7.8%, to close at 23,851.02 on Monday - its worst one-day percentage drop since October 2008. The Standard & Poor’s 500 index fell 225.81 points, or 7.6%, to end at 2,746.56, its biggest one-day percentage decline since December 2008.

“Oil prices collapsed around 30% at the Asian open yesterday with WTI trading to a low of $27.38 while Brent fell to a low of $31.25. Brent crude is trading this morning around $34.40 per barrel (down 24% for the session) and WTI is at $30.80 (down 25%),” Catril added.

While the SHFE base metals were also weaker at the close of morning trading on Monday, the complex is showing signs of recovery with nickel leading the charge higher.

The most-traded June nickel contract rose to 104,180 yuan ($15,000) per tonne at the close of Tuesday’s morning session, up by 4,450 yuan per tonne or 4.6% from Monday’s close of 99,610 yuan per tonne.

Gains were recorded across the rest of the SHFE base metals, albeit to a lesser extent than that in nickel. May zinc rose by 2.2% to 15,905 yuan per tonne, June tin was up by 1.6% to 135,370 yuan per tonne, May copper increased by 1.5% to 44,540 yuan per tonne, April led rose by 0.4% to 14,540 yuan per tonne and May aluminium ticked up by 0.4% to 12,940 yuan per tonne.

Other highlights

  • The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was slightly up by 0.01% at 95.41 as at 11.35am Shanghai time.
  • The Shanghai Composite Index was up by 0.62% at 2,961.54 as at 11.30 am Shanghai time.
  • In data on Monday, German industrial production increased by a seasonally adjusted 3% in January from the prior month, which was better than the forecast 1.7% increase. The German trade surplus narrowed to €18.5 billion ($21.1 billion) in January from €19 billion in the preceding month.
  • Also on Monday, the European Union’s Sentix investor confidence index fell to -17.1 in March from 5.2 in February.
  • Data already out on Tuesday showed China’s consumer price index rose by 5.2% year on year in February, while its producer price index dipped by 0.4% over the same comparison.
  • The EU’s final employment change and revised gross domestic product (GDP) are due later.
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