LIVE FUTURES REPORT 11/12: SHFE base metals prices mostly little changed to higher; Ni gains 2%

Base metals prices on the Shanghai Futures Exchange were broadly in positive territory during the morning trading session on Wednesday December 11, but the upside momentum was capped by lingering uncertainty surrounding key risk events this week.

Reports on Tuesday that new tariffs on $160 billion of Chinese goods, expected to come into effect on Sunday, are likely to be delayed has provided a slight boost to market sentiment this morning though a final decision on a deferral remains in the hands of United States President Donald Trump.

That said, even with a delay in the tariffs being implemented, the specter of lingering trade uncertainty as we head into a new year is likely to keep a cap on participants’ appetite for risk.

Investors are also likely to be adopting a wait-and-see stance ahead of the US Federal Reserve’s rate decision later on Wednesday and the United Kingdom’s general election on Thursday.

Still, a softer dollar of late remains supportive of the base metals. The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was down by 0.03% at 97.49 as at 10.02am Shanghai time. This compares with a reading of 97.64 at around 12pm Shanghai time on Tuesday.

Nickel outperformed its peers this morning, with the metal’s most-traded February contract climbing to 107,290 yuan ($15,244) per tonne as at 11.30am Shanghai time, up by 2,130 yuan per tonne – or 2% – from Tuesday’s close of 105,160 yuan per tonne.

The gains in nickel are at odds with the metal’s fundamental backdrop, which has seen significant inflows at London Metal Exchange-registered warehouses recently while downstream demand in China remains weak.

On-warrant nickel stocks at LME warehouses rose to their highest since October after the largest one-day inflow since January 2016 on Tuesday. Yesterday’s net increase of 14,244 tonnes brought total stocks to 83,520 tonnes.

Meanwhile, China’s stainless steel sector – a major consumer of nickel – is said to have significant stockpiles while demand remains soft with the end of the year approaching, a Shanghai-based analyst said.

Fastmarkets’ weekly price assessment for stainless steel cold-rolled coil 2mm grade 304 domestic, ex-whs China in the country’s major market of Wuxi was 14,400-15,000 yuan per tonne including value-added tax for the week ended December 4, down 300 yuan per tonne from a week earlier, due to the high amount of stocks available.

Gains were muted across the rest of the complex: the January copper contract was up by 0.04% to 48,710 yuan per tonne, the February aluminium contract edged up by 0.14% to 13,910 yuan per tonne, the January lead contract ticked up by 0.20% to 15,055 yuan per tonne and the May tin contract rose by 0.26% to 139,940 yuan per tonne.

Zinc was the lone metal to record a loss this morning, with its most-traded February contract sliding by 0.45% to 17,845 yuan per tonne.

Other highlights

  • In data on Wednesday, the US Federal Open Market Committee (FOMC) will release its rate decision, statement and economic projections and will give a press conference. Other US releases of note include the consumer price index and crude oil inventories.