LIVE FUTURES REPORT 22/09: SHFE nickel prices slide on soft demand; rest of complex lower

Base metal prices on the Shanghai Futures Exchange (SHFE) were weaker across the board during the Asian morning session on Friday September 22, with nickel giving the worst performance as soft demand from China’s stainless steel sector weighed on prices.

The most-traded January nickel contract on the SHFE stood at 85,070 yuan ($12,907) per tonne as of 03:00 BST, down 2,890 yuan or 3.3% from the previous session’s close.

Weakened demand for nickel amid ongoing environmental inspections across China has pressured the metal’s prices lower this morning.

“The environmental inspections have affected production of stainless steel which in turn has seen demand for nickel decline,” Ellie Wang, senior nickel and ferro-chrome analyst at Metal Bulletin, said.

“Trading volumes and prices of stainless steel have both fallen recently and the risk of a build-up in stainless steel stocks has increased, which is putting a great amount of downward pressure on nickel prices,” China’s Galaxy Futures said.

General weakness throughout the rest of the base metals as the markets continued to digest the news that US president Donald Trump had extended sanctions on North Korea.

The most-traded November copper on the SHFE contract fell 490 yuan or 1% to 49,670 yuan per tonne after Trump extended the scope of sanctions to individuals that provide goods, services or technology to North Korea.

He also said the Chinese central bank has told other banks in the country to stop doing business with North Korea with immediate effect.

This after prices had already come under slight selling pressure following hawkish comments from the US Federal Reserve which saw the dollar rebound.

Rest of complex weaker

  • The SHFE’s most-traded November aluminium contract declined 290 yuan or 1.7% to 16,500 yuan per tonne.
  • This after the price had rallied to a fresh six-year high of 17,250 yuan per tonne on Wednesday following news that two companies in China’s Henan province have begun cutting aluminium and alumina capacity at their refineries two months earlier than the country’s scheduled winter cutback.
  • “We cannot ignore the high aluminium stocks at present. Although the environmental inspections may help offset [these high levels], the rebalancing of supply and demand still needs more time,” Galaxy Futures said.
  • The most-traded November lead contract on the SHFE decreased 510 yuan or 2.5% to 20,140 yuan per tonne.
  • The SHFE’s most-traded November zinc contract retreated 440 yuan or 1.8% to 24,765 yuan per tonne.
  • The most-traded January tin contract on the SHFE eased 900 yuan or 0.6% to 143,870 yuan per tonne.

Currency moves and data releases

  • The dollar index was recently down 0.14% at 92.05.
  • In other commodities, the Brent crude oil spot price was down 0.16% to $56.34 per barrel, and the Texas light sweet crude oil spot price rose 0.08% to $50.59.
  • In equities, the Shanghai Composite dipped 0.35% to 3,345.97.
  • In US data on Thursday, the house price index in July ticked up by 0.2%, below the forecast of a 0.4% rise. Weekly unemployment claims came in at 259,000, an improvement over the previous figure of 284,000. Finally, the Philly Fed manufacturing index in September was 23.8, better than the expectations of 17.3.
  • Today, we have a host of flash manufacturing and services PMI data out across Europe and the USA.
  • In addition, UK prime minister Theresa May is speaking about Britain’s post-Brexit relationship with the EU later.

LME snapshot at 0300 London time
Latest 3M  LME Prices
Price ($/t)  Change since yesterday’s close ($)
Copper 6,407.5 -72.5
Aluminium 2,139 -32
Lead 2,409 -104
Zinc 3,033 -67.5
Tin 20,350 -100
Nickel 10,700 -305

SHFE snapshot at 1000 Shanghai time
Most traded SHFE contracts
Price (yuan/t)  Change since yesterday’s close (yuan)
Copper (November) 49,670 -490
Aluminium(November) 16,500 -290
Zinc(November) 24,765 -440
Lead(November) 20,140 -510
Tin (January) 143,870 -900
Nickel (January) 85,070 -2,890

Changjiang spot snapshot on Friday September 22
Range (yuan/t)  Change (yuan)
Copper  49,770—49,790 -560
Aluminium 16,220—16,260 -370
Zinc 25,650—26,450 -360
Lead 20,950—21,150 -300
Tin  142,000—143,500 -1,250
Nickel  85,600—86,300 -3,250
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