LIVE FUTURES REPORT 11/01: SHFE nickel prices track strong performance on LME; lead down on weak demand

Nickel prices on the Shanghai Futures Exchange extended their gains during Asian morning trading on Thursday January 11, tracking the strong performance of the metal on the London Metal Exchange in recent days, with robust demand amid a tighter market providing support.

The most-traded May nickel contract on the SHFE increased by 670 yuan or 0.7% to 101,090 yuan ($15,510) per tonne as of 10.12am Shanghai time.

On Wednesday, the LME three-month nickel price closed up by 1.8% on the previous day’s close, having hit an intraday high of $13,200 per tonne earlier in the day with robust demand from the stainless steel sector amid a tighter market boosting prices.

“With profitable stainless steel production, the output of stainless steel will stay at high levels, which then will support the demand for nickel,” China’s Galaxy Futures noted on Thursday.

“The nickel supply shortage is likely to continue as the London-Shanghai import arbitrage window remains closed,” the broker added.

Metal Bulletin’s arbitrage calculation showed a loss of $585.22 per tonne for imported nickel to Shanghai on Wednesday.

Another factor pushing nickel prices upward are higher Chinese import duties since the start of the year and higher long-term contract premiums.

“Beijing is charging higher fees to import refined nickel into the country - with the government raising the tax to 2% from 1% previously,” a Shanghai-based nickel analyst said.

Base metals prices higher; lead slips

  • The SHFE March aluminum contract increased by 115 yuan or 0.8% to 15,175 yuan per tonne.
  • “There have been more financing trade inquiries since the beginning of 2018 which has raised demand for spot aluminium ingots,” a Shanghai trader noted.
  • “However, demand from downstream producers has been affected by environmental inspections,” the trader added.
  • The SHFE March copper contract rose by 0.4% or 240 yuan to 55,040 yuan per tonne.
  • A wave of labor negotiations at several of the world’s leading copper mines is taking place this year and could have a significant impact to the global copper supply and prices.
  • The SHFE March zinc contract price was up by 95 yuan per tonne or 0.4% to 26,135 yuan per tonne.
  • The SHFE May tin contract price gained 90 yuan or 0.1% to 145,390 yuan per tonne.
  • Lead was the lone metal in negative territory this morning, with its most-traded February contract on the SHFE down by 35 or 0.2% to 19,380 yuan per tonne.
  • “Winter is the traditionally weak season [for demand]. Moreover, environmental inspections have affected the downstream demand for lead significantly,” a trader told Metal Bulletin.

Currency moves and data releases

  • The dollar index was down by 0.06% to 92.28 as of 11.10am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.1% to $63.52 per barrel as of 11.10am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.3% to 3,411.46 as of 11.00am Shanghai time.
  • In data on Wednesday, UK manufacturing production rose by 0.4% in November, surpassing an expected 0.3% increase. US import prices disappointed with a 0.1% rise compared with expected growth of 0.4%, while crude oil inventories declined by 4.9 million barrels from the prior week.
  • The economic agenda is fairly busy today with EU industrial production, the European Central Bank’s monetary policy meeting accounts and a host of US data that includes producer prices, unemployment claims, IBD/TIPP economic optimism and the federal budget balance.
  • In addition, US Federal Open Market Committee member William Dudley is speaking.
LME snapshot at 02.12am London time
Latest three-month LME Prices

Price ($ per tonne) Change since yesterday’s close ($)
Copper 7,164.5 11.5
Aluminium 2,195.5 13.5
Lead 2,554.5 4.5
Zinc 3,350.5 14.5
Tin 20,025 -40
Nickel 12,825 -110

SHFE snapshot at 10.12am Shanghai time
Most-traded SHFE contracts

Price (yuan per tonne) Change since yesterday’s close (yuan)
55,040 240
Aluminium 15,175 115
Zinc 26,135 95
Lead 19,380 -35
145,390 90
101,090 670

Changjiang spot snapshot on Thursday January 11

Range (yuan/t) Change (yuan)
Copper 54,690-54,710 50
Aluminium 14,900-14,940 190
Zinc 26,120-26,920 -80
Lead 19,300-19,500 0
Tin 144,000-145,500 500
Nickel 100,000-100,300 450
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