LIVE FUTURES REPORT 20/05: SHFE base metals prices mixed as copper and nickel head in opposite directions

Base metals prices on the Shanghai Futures Exchange were mixed during morning trading on Monday May 20, with nickel leading the falls and only copper and lead showing positive performances.

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.

Other highlights

  • In US data last Friday, the University of Michigan’s preliminary consumer sentiment beat expectations of a reading of 97.8 to register 102.4.
  • In Europe, the Consumer Price Index was in line with last year at 1.7%, and its core Consumer Price Index was at 1.3%, up from an expected 1.2%.
  • US Federal Reserve chair Jerome Powell and the country’s Federal Reserve Governor Richard Clarida are both to speak today.
  • In Germany, the latest Producer Price Index numbers and the Buba Monthly Report are due out later today.
  • The latest Monetary Policy Meeting minutes from the Reserve Bank of Australia will also be released.
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