LIVE FUTURES REPORT 18/11: Nickel leads SHFE base metals downward with 2% drop

Base metals prices on the Shanghai Futures Exchange were down across the board during the morning trading session on Monday November 18, with nickel giving the worse performance of the complex while the metal’s prices continue to correct following a strong run-up between June and September.

The most-traded February nickel contract stood at 116,120 yuan ($16,566) per tonne as at 10.06am Shanghai time, down by 2,350 yuan per tonne – or 2% – from Friday’s close of 118,470 yuan per tonne.

Nickel prices on the SHFE have been under pressure since the metal’s most-active contract hit a high of 146,850 yuan per tonne on September 4, shedding around 21% or 30,730 yuan per tonne since then.

One analyst attributed the dull performance by nickel this morning to a downtrend in the London Metal Exchange three-month price and the emergence of short-sellers.

“Nickel has been dragged lower by the relatively low LME price at the end of last week and pervading bearish sentiment. As a result, some short-selling has emerged in the early morning session,” a nickel analyst at Guotai Junan told Fastmarkets.

More broadly, nickel, and indeed the rest of the SHFE base metals, are also being pressured by heightened risk aversion amid violent protests in Hong Kong over the weekend, with police issuing a warning that live ammunition may be used against protestors.

But the downside was limited after hopes of near-term phase-one deal between the United States and China grew following comments from White House Advisor Larry Kudlow on Friday that the two sides are “getting close” to a trade deal.

Then on Saturday, China said Vice Premier Liu He had spoken to US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin and had “constructive discussion on each side’s core concerns regarding the phase-one agreement”.

As a result of the mixed macroeconomic backdrop, the rest of the SHFE base metals were broadly little changed to down. January copper was unchanged from its close on Friday at 46,930 yuan per tonne, while January aluminium was down by just 10 yuan per tonne at 13,660 yuan per tonne. January tin was similarly little changed with a slight dip of 30 yuan per tonne to 134,460 yuan per tonne, January zinc fell by 115 yuan per tonne to 18,225 yuan per tonne and January lead was down by 90 yuan per tonne to 15,720 yuan per tonne.

Other highlights

  • The dollar index, which gauges the strength of the US currency against a basket of foreign currencies, was down by 0.08% at 97.94 as at 10.08am Shanghai time.
  • In data on Friday, the US’ retail sales rose by 0.3% in October on a month on month basis while its Empire State Manufacturing index was softer with its general business conditions falling to 2.9 against expectations for a rise to 6.1.
  • It is a quiet day for data on Monday with the German Bundesbank’s monthly report and the National Association of Home Builders’ housing market index due.