LIVE FUTURES REPORT 10/12: Positive momentum continues in most SHFE base metals; Ni outperforms with 1.1% gain

With the exception of those for zinc and lead that were marginally down, base metals prices on the Shanghai Futures Exchange were stronger during the morning trading session on Tuesday December 10.

The broadly positive performance comes after another round of better-than-expected data releases on Monday continued to point to a stabilization in the global economy, which in turn boosted risk sentiment.

In European data on Monday, the German trade surplus widened to €20.6 billion ($22.8 billion) in October, topping the expected €19 billion. Meanwhile, the European Union’s Sentix Investor Confidence index jumped to +0.7 in December, from -4.5 in November, to reach its highest since March 2018.

Japanese data on Monday showed the country’s economy expanded much quicker in the third quarter than initially reported; gross domestic product grew at an annualized pace of 1.8% in July-September from the prior quarter, faster than an initial reading of 0.2%, revised Cabinet Office data showed.

But the positive tone was tempered by the release of statistics earlier this morning that showed China’s consumer inflation rose by the quickest pace in nearly eight years. China’s consumer price index (CPI) rose to 4.5% in November, the quickest growth rate since January 2012 and up from 3.8% previously.

Meanwhile, market participants will likely be focused on the United States Federal Open Market Committee’s (FOMC) two-day policy meeting which gets under way today. Stronger-than-forecast employment and consumer sentiment figures from the US at the end of last week have reinforced expectations that the FOMC will adopt a more neutral stance.

“Investors widely expect the central bank to hold interest rates unchanged,” John Browning, managing director of China-focused brokerage BANDS Financial, said.

“This time last year the Fed was signaling its intention to raise rates 3-4 times throughout 2019, in fact, they cut rates 3 times in 2019 and unsurprisingly the stock market and asset values went up,” Browning added.

Other key risk events this week that are likely to dominate market focus include the United Kingdom general election on Thursday and Sunday’s deadline for the US to put a 15% tariff on another $160 billion of Chinese imports.

But despite these looming events, the base metals were broadly up this morning, with nickel leading the charge higher.

The most-traded February nickel contract climbed to 105,810 yuan ($15,031) per tonne as at 11.30am Shanghai time, up by 1,100 yuan per tonne – or 1.1% – from Monday’s close of 104,710 yuan per tonne.

Gains in the rest of the complex were more tempered: The most-traded January tin and February copper contracts rose by 0.6% and 0.4% respectively to 141,070 yuan and 48,610 yuan per tonne, while January aluminium nudged up by 30 yuan per tonne – or 0.2% – to 13,965 yuan per tonne.

Lead and sister metal zinc shrugged off the general strength, with the most-traded February zinc and January lead contracts dropping by 0.1% to 17,885 yuan per tonne and 15,125 yuan per tonne respectively.

Other highlights

  • The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was little changed at 97.64 as at 12.00pm Shanghai time.
  • It is a busy day for data on Tuesday with UK manufacturing production and Germany’s ZEW economic sentiment of note.