LIVE FUTURES REPORT 15/11: SHFE base metals prices largely down on disappointing Chinese data

The most-traded February Nickel contract on the SHFE slumped to 118,250 yuan ($16,838) per tonne as at 10.08am Shanghai time, down by 3,310 yuan per tonne from Thursday’s close of 121,560 yuan per tonne.

The rest of the complex, barring tin, were similarly weaker, ranged between a 0.1% drop in January aluminium and January lead and a 0.4% fall in January copper and January zinc. January tin was the most resilient of its peers, showing a modest gain of 0.06%.

“The base metals complex is absorbing the bearishness resulting from yesterday’s release of economic data and uncertainty toward a trade deal between China and the US,” analysts with Chinese brokerage Jinrui Futures said in a morning note.

In data on Thursday, China’s industrial output grew by 4.7% year on year in October, well below the expected 5.5% increase and down from 5.8% previously. Chinese retail sales also slowed last month with a 7.2% year-on-year gain, down from the 7.8% year-on-year increase in September.

“The latest downshift in global macro data is providing a not so subtle reminder of the pernicious effect the protracted US-China trade war is having on the worldwide economy.” Stephen Innes, Asia Pacific market strategist at AxiTrader, said.

“The latest activity, employment, and growth data out of China, Australia, and Japan are suggesting the tariff knock-on effect is worse than expected as economic conditions refuse to adjust to trend,” Innes added.

Meanwhile, nickel’s underperformance comes amid a flip-flop of policy in Indonesia over a ban on nickel laterite ore exports and muted demand for the metal in China.

“The market has become used to the changing news from Indonesia about its next year nickel laterite ore ban, and accordingly investors are not very responsive to the nation’s potentially sudden change in mining regulation,” Jinrui Futures analysts noted.

“The market for stainless steel – nickel’s main consumer – is experiencing high levels of stocks in China and muted demand which is creating headwinds for nickel prices,” the analysts added.

Other highlights

• The dollar index, which gauges the strength of the US currency against a basket of foreign currencies, was down by 0.03% at 98.15 as at 10.08am Shanghai time.
• In data on Thursday, preliminary readings showed Germany’s gross domestic product rose by 0.1% in the third quarter, better than the 0.1% decline that had been expected. Meanwhile, the United Kingdom’s retail sales fell by 0.1% in the three months ended October compared with the prior quarter, missing an expected rise of 0.2%.
• In United States data on Thursday, the producer price index rose by 0.4% month on month in October, slightly better than the 0.3% increase that had been forecast. Crude oil inventories rose more than expected in the week ended November 8 with a 2.2 million-barrel rise.
• Key data of note on Friday includes the European Union’s consumer price index and trade balance, as well as a host of US releases including retail sales, the Empire State Manufacturing Index, import prices and industrial production.