LIVE FUTURES REPORT 23/10: SHFE base metals prices broadly down; Ni jumps 2.7%

Following the weakness seen at the start of the week, nickel has rebounded strongly this morning. The most-traded December nickel contract on the SHFE climbed to 129,120 yuan ($18,240) per tonne as at 10.15am Shanghai time, up by 3,430 – or 2.73% – from Tuesday’s close of 125,690 yuan per tonne.

The recovery follows a similar performance by the London Metal Exchange’s three-month nickel price on Tuesday, when it closed at $16,525 per tonne to record a gain of 2.6% from the previous day’s close of $16,000 per tonne.

Supporting the upward move in nickel prices was a continued draw on LME inventories despite the emergence of a contango in the exchange’s cash/three-month spread. Consistent drawdowns in these conditions have given rise to speculation that Chinese consumers, including stainless steel giant Tsingshan, were actively stockpiling material in anticipation of a shortfall as a result of the Indonesian ore ban coming into effect in January 2020.

LME nickel stocks totaled 87,132 tonnes on Tuesday, a decline of 47% from the 164,274 tonnes recorded on September 16. SHFE nickel stocks totaled 23,993 tonnes on October 18, up by 797 tonnes from a week earlier.

In supply news, Russian multi-metal miner Nornickel confirmed on Tuesday that three people had been killed in an accident at its Taimyr mine in Siberia. The company, which is Russia’s largest miner and the second-largest global nickel producer, has not released particulars surrounding the accident as yet but the mine is believed to still be operational.

Other highlights

• In the other base metals, tin gave the second-best performance with its most-traded January contract ticking up by 0.4%. The rest were weaker, ranged between a 0.1% drop in December aluminium and a 1% drop in December lead.
• The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was up by 0.07% at 97.55 as at 10.16am Shanghai time.
• The Shanghai Composite Index was down by 0.15%, at 2,950.03 as at 10.44am Shanghai time.
• In data on Tuesday, CBI industrial order expectations from the United Kingdom came in at -37, below the expected -25.
• Existing home sales in the United States were similarly disappointing at a seasonally adjusted 5.38 million units in September, down from 5.50 million units previously. The Richmond manufacturing index surprised to the upside, with a reading of 8, significantly beating the expected reading of -7.
• In data on Wednesday, consumer confidence from the European Union and US weekly crude oil inventories are of note.