MethodologyContact usLogin
These concerns were reignited following the release of disappointing manufacturing data from across Europe on Monday.
“The euro area manufacturing purchasing managers’ index (PMI) plunged to a new cyclical low in September. The preliminary read dropped 1.4pts to 45.6, led by weakness in Germany. Concerns that weak manufacturing activity is spilling over into the services industries are intensifying,” Felicity Emmett, analyst at Australia and New Zealand Banking Group (ANZ), said in a morning note.
“European Central Bank (ECB) President [Mario] Draghi spoke at EU Parliament and underlined the need for extremely accommodative policy settings in Europe. He reiterated that the ECB is prepared to use all instruments and is ready to cut rates further, but stressed that fiscal policy must make a more decisive contribution to growth – noting that the focus should be on enhancing productivity growth,” Emmett added.
Risk-off sentiment intensified following the release of the weak European data and is now acting as a broad headwind for the SHFE base metals this morning, with most of the complex down between 0.2% in the case of zinc and 1.4% for nickel.
The most-traded November nickel contract fell to 136,900 yuan ($19,249) per tonne as at 9.57am Shanghai time, down by 1,910 yuan per tonne from Monday’s close of 138,810 yuan per tonne.
Despite the fundamental support of Indonesia deciding to expedite an export ban on nickel ore by two years to January 1, 2020, enthusiasm toward investing in the metal has cooled in response to the latest forecast from Nornickel, the world’s largest producer of nickel.
A forecast from Nornickel at the recent International Stainless & Special Steel Summit projected the global nickel supply deficit will shrink in 2020 despite the implementation of the latest Indonesian ore export ban. Nornickel forecast a deficit of 28,000 tonnes in 2020 from an estimated deficit of 60,000-70,000 tonnes in 2019.
In addition, sending further downward pressure to the base metals is the continued firmness of the US currency.
The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was up by 0.06% at 98.67 as at 9.57am Shanghai time.
Copper and aluminium, however, bucked the weaker tone exhibited by their peers to record gains of 0.5% and 0.04% respectively.
Other highlights