LIVE FUTURES REPORT 24/12: SHFE base metals prices mostly down; nickel outperforms

“In general, the worldwide equities and crude oil markets have fallen drastically and the economy showed a more intensified downturn, currently it’s still the bearish sentiment that dominates the base metals sector,” Citic Futures said in a morning note.

“Copper is very much the indicator of macroeconomic changes, and the core reason for its weak performance was the decision to raise interest rate from US Federal Reserve on December 20 which is also expected to raise [rates] twice next year, thus sending off risk-off sentiment in the market,” a Shanghai-based analyst said.

The most-traded February copper contract on the SHFE stood at 48,220 yuan per tonne as at 9.56am Shanghai time, down by 120 yuan per tonne from last Friday’s close.

“Looking from the micro perspective for copper, enterprises are closing their accounts at banks gradually, and downstream companies are mainly dealing with their cash inflow, these will cap copper demand at a weak level,” Citic Futures added.

The other base metals seemed content to follow the weaker tone set out by copper and fell this morning – though tin was broadly flat. Nickel outperformed, however, with the metal’s most-traded May contract up by 980 yuan per tonne to 90,730 yuan per tonne.

Nickel was no doubt finding some support from a weaker US currency; the dollar index, recently at 96.83, is down from a high of 97.71 reached on December 14.

“The nickel market hasn’t been running ahead of expected demand recently, and people are getting realistic that stainless steel is the dominant consumer for nickel versus to electric vehicle sector,” the Shanghai-based analyst said.

“Some stainless steel mills in China are expected to undergo shut-down for maintenance ahead of the coming Chinese New Year holiday, and this may help to lift the stainless steel price up in the near future,” the analyst added.

Base metals prices

• The SHFE May nickel contract was up by 980 yuan per tonne to 90,730 yuan per tonne.
• The SHFE February zinc contract dipped by 275 yuan per tonne to 20,820 yuan per tonne.
• The SHFE February lead contract slid by 10 yuan per tonne to 18,025 yuan per tonne.
• The SHFE May tin contract moved up by 50 yuan per tonne to 146,900 yuan per tonne.
• The SHFE February copper contract was down by 120 yuan per tonne to 48,220 yuan per tonne.
• The SHFE February aluminium contract was down 15 yuan per tonne to 13,735 yuan per tonne.

Currency moves and data releases

• The dollar index was down by 0.1% at 96.83 as at 9.56am Shanghai time.
• In other commodities, the Brent crude oil spot price was up by 0.4% at $53.92 per barrel as at 9.56am Shanghai time.
• In equities, the Shanghai Composite Index was up by 0.18% at 2,520.86 as at 10.25am Shanghai time.
• In data last Friday, the United States’ real gross domestic product (GDP) increased at an annual rate of 3.4% in the third quarter, down slightly from a forecast increase of 3.5%.
• The economic agenda is light today with only Japan’s services producer price index of note.