LIVE FUTURES REPORT 14/06: Most SHFE base metals prices up, nickel leads the advance

The most-traded September nickel contract price on the SHFE jumped to 117,040 yuan ($18,276) per tonne as at 10.14am Shanghai time, up 2,320 yuan per tonne from Wednesday’s close.

Volume has been high with 645,316 lots traded as at 10.14am Shanghai time, compared with 555,310 lots at the close on June 7. Open interest stood at 401,800 positions, up 32,070 positions from Wednesday’s close.

Buying interest for nickel in China has picked up on a perceived tightening of supply of the metal and an improved performance in the country’s stainless steel market.

SHFE nickel stocks fell 581 tonnes to 30,635 tonnes as of June 8. Stocks at SHFE warehouses are now down 37.3% since the start of the year. Meanwhile, nickel inventories at London Metal Exchange warehouses fell 972 tonnes to 277,014 tonnes on Wednesday.

“Supply for nickel plate is still tight, and falling inventories are supporting prices,” Citic Futures Research said.

“In addition, nickel pig iron (NPI) prices are being supported by the production disruptions due to environmental crackdowns [in China],” the Citic Futures Research added.

Environmental inspection-related disruptions at NPI smelters in northern and eastern China could remove as much as 5,000 tonnes per month of downstream supply of nickel from the Chinese market due to ongoing environmental inspections in the regions.

In downstream markets, robust stainless steel prices in China continue to underpin prices for nickel.

Metal Bulletin’s assessment of prices for benchmark 304 stainless cold-rolled coil in the major market of Wuxi was 15,800-16,100 yuan per tonne including VAT for the week ended Thursday June 7, up 400-600 yuan per tonne from a week earlier.

Meanwhile, copper prices rose on the back of a weaker dollar during the morning session on Thursday.

The SHFE August copper contract price rose 260 yuan per tonne to 53,790 yuan per tonne as at 10.14am Shanghai time.

The dollar index had initially moved higher after the US Federal Open Market Committee (FOMC) raised interest rates at its meeting on Wednesday, but the strength was short-lived with the move widely expected in the market.

“The FOMC increased interest rates [by] 25 basis points as expected, with its communication a little more hawkish, but only at the margin. There were small changes to the messaging and forward guidance accompanying the decision,” ANZ Research noted.

The dollar index had climbed to a high of 94.05 on Wednesday, but quickly retreated. It was at 93.55 as at 10.12am Shanghai time on Thursday.

Base metals prices

• The SHFE August aluminium contract price rose 35 yuan per tonne to 14,705 yuan per tonne
• The SHFE July lead contract price dipped 175 yuan per tonne to 20,330 yuan per tonne.
• The SHFE August zinc contract price rose 75 yuan per tonne to 24,345 yuan per tonne.
• The SHFE September tin contract price gained 390 yuan per tonne to 147,890 yuan per tonne.

Currency moves and data releases

• The dollar index was up 0.05% at 93.55 as of 10.12am Shanghai time.
• In other commodities, the Brent crude oil spot price was up 0.09% to $76.58 per barrel as of 10.12am Shanghai time.
• In equities, the Shanghai Composite was down by 0.22% to 3043.52 at 10.58am Shanghai time.
• In US data on Wednesday, the producer price index gained 0.5% in May, against an expected increase of 0.2%. Crude oil inventories declined 4.1 million barrels over the past week, against an expected decrease of 1.4 million barrels.
• In data today, China’s fixed asset investment rose 6.1% year on year in May, against a 7% rise in the prior month, while the country’s industrial production rose 6.8% on an annual basis in May, compared with 7% growth in April.
• Later we have a host of US data that includes core and headline retail sales, unemployment claims, import prices, business inventories and natural gas storage.