LIVE FUTURES REPORT 12/11: SHFE nickel price slumps 2.6%, mirroring weakness on LME; others mixed

Base metals prices on the Shanghai Futures Exchange gave a subdued performance during morning trading on Tuesday November 12, with the complex awaiting the next development in United States-China trade talks.

Trade uncertainty reemerged after US President Donald Trump said over the weekend that while that trade negotiations with China are progressing well, there was not yet an agreement to roll back tariffs on Chinese goods.

“Markets are struggling as investors struck a cautious chord after a run of not so convincing headlines from the US administration suggested last week’s optimism on the US-China trade talks might have been premature,” Stephen Innes, Asia Pacific market strategist at AxiTrader, said in a note.

The cautious tone in markets also comes ahead of a speech by President Trump to the Economic Club of New York later on Tuesday. The event will likely be closely watched, with participants hoping for details on his upcoming meeting with Chinese President Xi Jinping.

Soft Chinese financing data on Monday added to the less positive backdrop for the base metals.

Chinese banks extended 661.3 billion yuan ($94.55 billion) in new yuan loans last month, down sharply from 1,690 billion yuan in September and below the forecast 800 billion yuan.

As a result, the most-traded base metals contracts on the SHFE were little changed to weaker this morning compared with their closes on Monday: January copper (+0.02%), December aluminium (+0.07%), January zinc (+0.7%), December lead (-0.9%) and January tin (-0.9%).

Leading the decline, however, was the most-traded February nickel contract with a 2.6% drop. The contract slid to 121,210 yuan per tonne as at 9.30am Shanghai time, down by 3,260 yuan per tonne from a close of 124,470 yuan per tonne on Monday.

This follows a continued sell-off in the London Metal Exchange three-month nickel price, which dropped by around 4% on Monday to close at $15,565 per tonne, its lowest 5pm close since August 7.

“Nickel fell sharply after Indonesia partially lifted a ban on raw material exports,” ANZ Research analyst Felicity Emmett said in a morning note.

“After bringing forward the ban recently, authorities announced it approved the export of certain cargoes of nickel ore that meet regulations. These consisted of companies who had met rules related to smelter investment,” Emmett added.

Other highlights

  • The dollar index, which gauges the strength of the US currency against a basket of foreign currencies, was up by 0.04% at 98.24 as at 9.30am Shanghai time.
  • In data on Monday, the United Kingdom’s preliminary gross domestic product (GDP) reading was 0.3%, lower than the forecast 0.4% but up from the previous month’s -0.2%, while manufacturing production was -0.4%, below expectations of -0.2%. Construction output contracted by 0.2%, above expectations of a 0.5% contraction and industrial production was -0.3%, lower than the -0.1% forecast.
  • In data on Tuesday, the UK will release employment figures while thinktank ZEW’s readings of economic optimism in Germany and the European Union are also due.
  • In addition to a speech by President Trump later on Tuesday, US Federal Open Market Committee member Richard Clarida is also speaking.