LIVE FUTURES REPORT 25/01: SHFE base metals prices benefit from follow-through strength; Cu, Al dip

Only SHFE copper and aluminium prices were weaker during Friday morning trading, albeit marginally, with these prices likely succumbing to the mounting pessimism surrounding the ongoing US-China trade negotiations and the wider effects that the trade conflict has had on economic growth in China.

“The US Commerce Secretary said the US and China were miles from resolution, but later said there was still a fair chance of a deal. This comes as both sides prepare for further talks in the US,” ANZ Research’s David Plank said in a morning note.

Despite this, lead, zinc, nickel and tin prices on the SHFE were all firmer this morning, tracking similar moves by the LME three-month base metals prices on Thursday.

Nickel led the advance with the metal’s most-traded May contract climbing to 94,580 yuan ($13,927) per tonne as at 9.59am Shanghai time, up by 990 yuan or 1.1% from Thursday’s close.

Nickel’s underlying fundamentals are likely to remain supportive, according to Fastmarkets analyst James Moore.

“The International Nickel Study Group (INSG) forecast the refined nickel market to record a further 33,000-tonne deficit in 2019 after the 118,700-tonne deficit in January-October 2018,” Moore said.

“The supply-demand picture for stainless steel in China is not expected to experience any major changes in 2019 compared with last year as authorities have restricted the construction of any new crude steel capacity,” he added.

On the supply side, nickel stocks at SHFE-listed warehouses totaled 13,884 tonnes on January 18, down by 75% from 57,165 tonnes a year ago.

Base metals prices

• The SHFE March copper contract was unchanged at 47,320 yuan per tonne.
• The SHFE March aluminium contract inched down by 25 yuan per tonne to 13,525 yuan per tonne.
• The SHFE March zinc contract increased by 125 yuan per tonne to 21,605 yuan per tonne.
• The SHFE March lead contract climbed by 140 yuan per tonne to 17,745 yuan per tonne.
• The SHFE May nickel contract soared by 990 yuan per tonne to 94,580 yuan per tonne.
• The SHFE May tin contract rose by 480 yuan per tonne to 148,730 yuan per tonne.

Currency moves and data releases

• The dollar index was up by 0.05% at 96.51 as at 9.58 am Shanghai time.
• In equities, the Shanghai Composite was up by 0.53% to 2,605.37 as at 10.15 am Shanghai time.
• In European data on Thursday, France’s flash manufacturing purchasing managers’ index (PMI) for January came in at 51.2, beating the expected 50 and was up from 49.7 previously. France’s flash services PMI for the same month stood at 47.5, down from 49 previously.
• Germany’s flash manufacturing PMI at 49.9 for January was down from 51.5 previously while the country’s flash services PMI climbed to 53.1 from 51.8.
• The European Union’s flash manufacturing PMI at 50.5 for January was down from 51.4 previously and its flash services PMI dropped to 50.8 from 51.2.
• In US data on Thursday, weekly unemployment claims at 199,000 were below the forecast of 219,000. US flash manufacturing and flash services PMIs for January were at 54.9 and 54 respectively, both better than estimates.
• It is a light day for data on Friday with German Ifo business climate and UK high street lending and CBI realized sales of note.
• In addition, the third day of the World Economic Forum’s annual meeting in Davos, Switzerland, gets underway.