LIVE FUTURES REPORT 17/10: SHFE nickel price slumps 2.1%, mirroring weakness seen on LME; other metals mixed

Base metals on the Shanghai Futures Exchange gave a largely subdued performance during the morning trading session on Thursday October 17, amid persistent macroeconomic uncertainty that continues to weigh on the complex.

A general sense of uncertainty and bearishness in global markets is keeping investors cautious this morning, with the SHFE base metals exhibiting mixed movements as a result.

Factors currently casting a cloud over global markets include the International Monetary Fund warning that global economic risks have risen while central banks lower borrowing costs, according to Kishti Sen, analyst with ANZ Research.

“The subsequent build-up of financial vulnerabilities could put medium-term growth at risk,” Sen said.

Uncertainty surrounding progress in trade talks between China and the United States also continues to act as a headwind for the base metals this morning. Tension between the two economic powerhouses has picked up following news that the US House of Representatives passed an act to support Hong Kong protestors.

In response, China threatened to retaliate against any measures US Congress may enact regarding support for the Hong Kong protestors, saying that US interests in the city would suffer.

As a result, the overall mood in the base metals markets this morning has been mostly bearish.

Nickel, as it did on the London Metal Exchange on Wednesday, led on the downside with a 2.1% drop in its most-traded December contract to 129,690 yuan ($18,282) per tonne as at 10.23am Shanghai time. This is down by 2,810 yuan per tonne from a close of 132,500 yuan per tonne on Wednesday.

The LME three-month nickel price hit a six-week low amid a 3% decline on Wednesday to close at $16,450 per tonne.

“Nickel was … down sharply as traders remained concerned about waning demand for its end-use product, stainless steel,” Sen said.

Meanwhile, lead was the biggest gainer this morning, similarly mirroring the heavy metal’s performance on the LME on Wednesday.

Lead’s most-traded November contract was at 17,110 yuan per tonne as at 10.23am Shanghai time, rising by 215 yuan per tonne - or 1.3% - from Wednesday’s close of 16,895 yuan per tonne.

“The underlying fundamentals appear supportive after the International Lead & Zinc Study Group (ILZSG) said the refined lead market was in a 4,200-tonne deficit in July, reflecting the impact of supply disruptions,” Fastmarkets analyst James Moore said.

“The market recorded a 47,000-tonne deficit in the first seven months of 2019, which compares with the 71,000-tonne surplus currently projected by the ILZSG for the whole of 2019,” Moore added.

Other highlights

  • The dollar index, which gauges the strength of the US currency against a basket of foreign currencies, was down by 0.01% at 97.99 as at 10.23am Shanghai time.
  • In European data on Wednesday, the United Kingdom’s consumer price index was 1.7% in September, below the expected 1.8%, while the producer price index contracted by 0.8%, against expectations of a 0.2% rise.
  • It is a busy day for data on Thursday with UK retail sales, a Bank of England credit conditions survey and a European Union economic summit of note. US releases include the Philly Fed Manufacturing Index, building permits, housing starts, unemployment claims, industrial production, capacity utilization rate and crude oil inventories.
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