LIVE FUTURES REPORT 22/01: SHFE copper prices pressured by rising stocks; nickel leads on the upside

The most-traded March copper contract on the SHFE fell to 53,670 yuan ($8,383) per tonne as of 10.13am Shanghai time, down by 40 yuan from the previous session’s close.

Copper recorded the biggest stock increase across the SHFE base metals complex last week, with SHFE deliverable copper stocks increasing by 8,804 tonnes or 5.3% to 176,233 tonnes as of January 19, in line with recent soft demand due to it being the traditionally weak season for red metal consumption. This was the fourth consecutive week that SHFE deliverable copper stocks have risen.

Metal Bulletin last assessed Shanghai-bonded copper stocks at 468,000-478,000 tonnes on January 15, up by 3,000 tonnes from the number reported on January 2.

Despite the recent weakness in the dollar, the outlook for three interest rate hikes in the United States this year has strengthened again following hawkish language from US Federal Open Market Committee member John Williams.

During an interview with the Wall Street Journal last week, Williams called for three interest rate hikes and growth of 2.25–2.5% this year, adding that he expected the recent tax cuts and other tailwinds to boost economic growth.

Falling stocks, pick-up in ferrous futures boost nickel

• Following a weak performance last week, nickel prices on the SHFE rebounded on Monday, buoyed by falling inventories and upbeat ferrous futures prices.
• The SHFE May nickel contract price climbed 1,550 yuan to 98,380 yuan per tonne as of 10.13am Shanghai time.
• SHFE nickel stocks declined by 230 tonnes or 0.4% last week to 57,165 tonnes as of January 19, halting the surge of inflowing stocks seen in the first two weeks of the year.
• In addition, market sentiment has brightened following the strong performance in ferrous futures contracts.
• “Ferrous futures prices started to perform strongly, if they are able to remain upbeat, nickel prices are likely to follow suit,” Citic Futures Research noted.
• The most-traded May rebar futures contract price rose to 3,936 yuan per tonne as of 10.52am Shanghai time, compared with 3,926 yuan per tonne at the close on Friday.

Zinc inches higher, rest weaker

• The SHFE March aluminium contract price dropped 120 yuan to 14,645 yuan per tonne.
• The SHFE March zinc contract price edged 35 yuan higher to 26,135 yuan per tonne.
• The SHFE March lead contract price fell 230 yuan to 19,340 yuan per tonne
• The SHFE January tin contract price dipped 90 yuan to 145,960 yuan per tonne.

Currency moves and data releases

• The dollar index was down by 0.06% at 90.61 as of 10.13am Shanghai time.
• In other commodities, the Brent crude oil spot price was flat at $69.1 per barrel as of 10.13 am Shanghai time.
• In equities, the Shanghai Composite was up by 0.03% to 3489.01 as of 10.58 am Shanghai time.
• In data on Friday, the German producer price index for December was in line with expectations at 0.2%. In US data, preliminary University of Michigan (UoM) consumer sentiment disappointed with a print of 94.4 – 97 had been called for, while UoM inflation expectations edged up to 2.8% from 2.7% previously.
• The economic agenda is light today with Eurogroup meetings throughout the day and the German Bundesbank’s monthly report also due.