LIVE FUTURES REPORT 12/01: Most SHFE base metals prices weaken; nickel leads the retreat

Nickel prices on the Shanghai Futures Exchange retreated during Asian morning trading on Friday January 12, in line with the weaker prices seen on the London Metal Exchange overnight, after selling emerged amid concerns that prices had run too high too soon.

The most-traded May nickel contract on the SHFE stood at 99,410 yuan ($15,278) per tonne as of 10.56am Shanghai time, down by 2,020 yuan from the previous trading day’s close.

On Thursday, the SHFE’s May nickel contract had rallied as high as 102,380 yuan per tonne, with prices running into selling as investors began to question the sustainability of the rally.

“In the short term [rest of the week] we expect a test lower,” William Adams, senior base metals analyst at Metal Bulletin said. “Sentiment in nickel turned less bullish as the EV [electric vehicle] story was deemed premature, which we think it is, and nickel supply has picked up with more nickel units flowing out of Indonesia.”

Indonesia had awarded quotas for 20.4 million tonnes of nickel ore exports by November 2017 after its export ban was relaxed at the start of the year. But only a small proportion of the ore was shipped to China, its biggest consumer, Chinese customs data showed.

Rather, the bulk of nickel ore quotas for 2017 is yet to be exported, meaning that shipments this year will be ample and will break the bottleneck in supply seen in 2017, according to market participants.

With no nickel ore bottleneck expected in 2018 and also more nickel pig iron (NPI) smelters being established in Indonesia, a greater amount of NPI from China and Indonesia will enter the market, according to a senior nickel analyst based in Shanghai.

Zinc, tin prices edge higher; rest lower

  • The SHFE March copper contract decreased by 420 yuan to 54,690 yuan per tonne.
  • The SHFE March aluminum contract fell by 115 yuan to 15,095 yuan per tonne.
  • The SHFE March zinc contract price edged up by 40 yuan to 26,295 yuan per tonne.
  • The SHFE May tin contract price inched 250 yuan higher to 145,400 yuan per tonne.
  • The SHFE February lead contract dipped by 165 yuan to 19,225 yuan per tonne.

Currency moves and data releases

  • The dollar index was down by 0.03% to 91.83 as of 11.30am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.2% to $69.26 per barrel as of 11:10 am Shanghai time.
  • In equities, the Shanghai Composite was up by 0.1% to 3428.65 as of 11:30 am Shanghai time.
  • In US data on Thursday, the December producer price index fell 0.1%, against an expected increase of 0.2%, while unemployment claims rose to 261,000 this week, marking the fourth consecutive weekly increase and a more-than-three-month high.
  • Data out already today showed China’s trade balance for December, in dollar-denominated terms, came in at a surplus of $54.7 billion, while the yuan-denominated balance stood at a surplus of 362 billion yuan, both surpassing expected and previous readings.
  • Later, the market will be keeping a close eye on the US consumer price index and retail sales releases, which may have some bearing on the dollar.
  • In addition, German Federal Bank President Jens Weidmann is speaking.
  • Looking ahead to the weekend, key Chinese data including new yuan loans and M2 money supply are expected.

LME snapshot at 02.51am London time
Latest three-month LME Prices
  Price ($ per tonne)  Change since yesterday’s close ($)
Copper 7,146.5 6
Aluminium 2,190 14.5
Lead 2,555 6
Zinc 3,394.5 8.5
Tin 20,205 -20
Nickel 12,655 35

SHFE snapshot at 10.56am London time
Most-traded SHFE contracts
  Price (yuan per tonne)  Change since yesterday’s close (yuan)
Copper 54,690 -420
Aluminium 15,095 -115
Lead 19,225 -165
Zinc 26,295 40
Tin 145,400 250
Nickel 99,410 -2,020

Changjiang spot snapshot on Friday January 12
  Range (yuan per tonne)  Change (yuan)
Copper  54,330-54,350 -360
Aluminium 14,810-14,850 -90
Zinc 26,220-27,020 100
Lead 19,150-19,350 -150
Tin  144,000-145,000 -250
Nickel  98,450-98,850 -1,500
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