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Nickel was one of the big underperformers, with the most-traded July contract declining to 97,540 yuan ($14,156) per tonne as at 9.59am Shanghai time, down by 340 yuan per tonne, or 0.3%, from Friday’s close of 97,880 yuan per tonne.
“Currently consumption of stainless steel, which is the main nickel usage field, is discouraging, and that’s been driving the nickel price down for a while,” according to Jinrui Futures.
“But momentum is picking up from the backwardation of nickel contracts on the London Metal Exchange, which suggests supply tightness at the moment and that is capping the descent in the nickel price,” a Shanghai-based analyst said.
The cash/three-month spread recently reached a $20 per tonne backwardation while the June/July LME spread recently moved out to a $39 per tonne backwardation, further indicating nearby tightness after a sustained period of contango.
Copper stands out as the best performer so far today, with its most-traded July contract rebounding by 140 yuan per tonne to 47,630 yuan per tonne as at 9.59 am Shanghai time amid positive signs in US-China trade talks.
“Overall, the trade talk tensions have been assuaged and risk-off sentiment has gradually retreated as a result, although we can’t rule out future fluctuations in [copper] prices as the dynamics of trade talks change,” Citic Futures said in its morning notes.
“Downstream copper demand has improved and will see further improvement,” Citic Futures added.
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