LIVE FUTURES REPORT 21/06: SHFE nickel leads complex downward; tin edges up

Base metals prices on the Shanghai Futures Exchange were broadly down during the morning trading session on Friday June 21, with nickel leading the charge lower.

The most-traded August nickel contract stood at 98,450 yuan ($14,332) per tonne as at 10.15am Shanghai time, down by 1,430 yuan per tonne, or 1.4%, from Thursday’s close of 99,880 yuan per tonne.

The rest of the complex, barring tin, were in negative territory with losses ranging from 0.1% for copper to 1.2% for zinc. The most-traded September tin contract ticked up by 300 yuan per tonne, or 0.2%, to 144,400 yuan per tonne as at 10.14am Shanghai time.

The broad weakness in the SHFE base metals follows disappointing data from the United States overnight and heightening geopolitical tensions, both of which dampened investors’ appetite for risk.

“The weak reading of the US’ Philadelphia Fed manufacturing index for June showed that the manufacturing industry still faces significant headwinds,” an analyst with China’s Guotai Jun’an Futures said.

“In addition, although central banks in Japan and the United Kingdom kept interest rates unchanged at recent meetings, a slowdown in the economic growth is widely agreed,” the analyst added.

In nickel, the more pronounced price weakness seen this morning could be the symptom of a deteriorating fundamental backdrop, according to the analyst.

“Nickel stocks in the spot market and Chinese exchanges are increasing, signaling negative demand fundamentals,” the analyst with Guotai Jun’an Futures said.

Deliverable nickel stocks at SHFE-listed warehouses surged by 5,835 tonnes, or 52.6%, to 16,936 tonnes in the week ended June 14. The next stocks report will be published later on Friday.

Other highlights

  • The dollar index was down by 0.07% at 96.55 as at 11.52am Shanghai time.
  • The Shanghai Composite Index was up by 0.6% at 3,004.93 as at 11.30 am Shanghai time.
  • In US data on Thursday, the Philadelphia Fed manufacturing survey showed lost momentum in US manufacturing, falling to 0.3 in June from 16.6 in May. In contrast, unemployment claims showed a steady labor market with initial claims of 216,000 for the week ended June 15, a decrease of 6,000 claims from the prior week.
  • In European data on Thursday, the UK’s retail sales month on month for the May-June period were in line with expectations with a month-on-month decline of 0.5%. The Bank of England, as expected, kept its official bank rate unchanged at 0.75%.
  • On Friday, there is a host of manufacturing purchasing managers’ index (PMI) data out across France, Germany, the EU and the US. Existing home sales in the US are also of note.