LIVE FUTURES REPORT 23/11: SHFE nickel prices push higher on strong fundamentals; copper corrects

Nickel prices on the Shanghai Futures Exchange pushed higher during Asian morning trading on Thursday November 23, broadly supported by the metal’s strong underlying fundamentals.

The most-traded May nickel contract on the SHFE stood at 95,910 yuan ($14,494) per tonne as of 10:33am Shanghai time, up by 900 yuan from the previous session’s close.

Nickel prices on the SHFE have risen this morning, finding support from supply-side factors.

“As the International Nickel Study Group (INSG) reported on Monday, the global nickel market showed a supply deficit of 54,300 tonnes in the first three quarters of the year. This was somewhat higher than in the same period last year. For the year as a whole, the INSG is envisaging a deficit of nearly 100,000 tonnes, which implies a huge shortfall in supply in the fourth quarter,” Commerzbank said on Wednesday.

Further support for nickel prices came from reports suggesting Philippine President Rodrigo Duterte is keeping a ban on new open-cast mines in place, according to Sucden Financial Research.

“There was a lot of hype during LME Week about the bullish impact of electric vehicles (EV) and in recent weeks it seems to have dawned on the market that although EVs will boost metal consumption considerably, it is too early to price this in,” Metal Bulletin analyst William Adams said.

“That said, the underlying current fundamentals are already firm and look set to tighten further, so we are not surprised prices have found support. Overall, we expect range-bound markets as buyers and sellers take advantage of the top and bottom of the ranges,” he added.

Copper corrects, but fundamentals remain strong

  • The SHFE’s most-traded January copper contract price fell 160 yuan to 53,950 yuan per tonne.
  • London Metal Exchange copper stocks declined a net 8,100 tonnes to 226,275 tonnes, with the majority of metal delivered out of warehouses in Busan, South Korea.
  • The global refined copper market had logged a 50,000-tonne deficit through August, primarily due to weak supply growth from major producer nations such as Chile, according to the International Copper Study Group.
  • “Copper was stronger, after workers at Southern Copper mines in Peru began a strike. This has seen all operations halt production as discussions continue between the union and management,” ANZ Research noted on Wednesday.
  • “Southern Copper said late [on Tuesday] that one of five unions for its workers in Peru had started an indefinite strike but that the stoppage had not affected normal operations at its mines,” Edward Meir, INTL FCStone analyst said.

Aluminium edges higher, others weaker

  • The SHFE January aluminium contract price edged 35 yuan higher to 15,030 yuan.
  • The SHFE January lead contract price dropped 380 yuan to 18,575 yuan per tonne.
  • The SHFE January tin contract price slid 220 yuan to 142,530 yuan per tonne.
  • The SHFE January zinc contract price inched down 5 yuan to 25,675 yuan per tonne.

Currency moves and data releases

  • The dollar index was down by 0.12% at 93.19 as of 11:44am Shanghai time. The index had earlier reached a low of 93.16, which was the lowest reading since October 20.
  • In other commodities, the Brent crude oil spot price was down by 0.16% to $63.14 per barrel as of 10:55am Shanghai time, and the Texas light sweet crude oil spot price decreased by 0.17% to $57.85.
  • In equities, the Shanghai Composite was down 0.73% to 3,405.35.
  • In US data on Wednesday, unemployment claims came in at 239,000, below the expected 241,000 and down from the previous month’s 252,000. Meanwhile, core durable goods fell 1.2% in October against an expected 0.3% increase.
  • The economic agenda is busy today with flash manufacturing and services purchasing managers index (PMI) data out across Europe. The second estimate for the United Kingdom’s third-quarter gross domestic product (GDP) is also due as well as the country’s preliminary business investment and CBI realized sales.
  • In addition, the European Central Bank’s October monetary policy meeting accounts will be released at 12:30pm London time.

LME snapshot at 02:32am London time
Latest three-month  LME Prices
($ per tonne)
 Change since yesterday’s close
Copper 6,936 -18
Aluminium 2,100 -7
Lead 2,439 -24
Zinc 3,235 7.5
Tin 19,415
Nickel 11,910 70
SHFE snapshot at 10:33am Shanghai time
Most-traded SHFE contracts
(yuan per tonne)
 Change since yesterday’s close
Copper  53,950 -160
Aluminium 15,030 35
Zinc 25,675 -5
Lead 18,575 -380
Tin  142,530 -220
Nickel  95,910 900

Changjiang spot snapshot on November 23
  Range (yuan/t)  Change (yuan)
Copper  53,770—53,790 -30
Aluminium 14,780—14,820 30
Zinc 25,840—26,640 -130
Lead 18,500—18,700 -250
Tin  142,000—143,500 0
Nickel  95,150—95,450 500
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