LIVE FUTURES REPORT 25/06: SHFE base metals prices on divergent paths; nickel finds support

Nickel prices led on the upside with the metal finding support from declining exchange inventories – indicating healthy consumption – and the expectation of greater demand in line with the development of the electric vehicle sector.

The most-active September nickel contract on the SHFE traded at 117,370 yuan ($18,042) per tonne as at 10.32am Shanghai time, up 370 yuan per tonne or 0.3% from last Friday’s close.

Nickel inventories at London Metal Exchange-listed warehouses remain at their lowest since March 2014 at 274,476 tonnes as of last Friday.

SHFE nickel stocks, meanwhile, dipped 1,292 tonnes last week to stand at 27,828 tonnes as of last Friday. Stocks are now down by 43% since the beginning of the year.

The positivity surrounding nickel’s prospects in the electric vehicle sector has also lent support to the metal’s prices, but there are some concerns that prices may have pushed too high too soon.

“There are expectation of huge nickel demand on the horizon by the mid-2020s and beyond, predominantly from the electric vehicle sector,” Daniel Briesemann, analyst at Commerzbank, told Metal Bulletin.

“This might be enough to push the price higher but we think there’s a lot of hype at the moment which is not yet justified. I think you’ll see some lower prices in the mid-to-long term,” he added.

Meanwhile on the supply side, the latest figures from the International Nickel Study Group (INSG) reflect bullish underlying fundamentals for nickel, with the refined market in a 52,600-tonne deficit in January-April 2018, according to Metal Bulletin analyst James Moore.

“In addition, the INSG expects the market to record a deeper 117,000-tonne deficit in 2018 than the 53,000-tonne deficit forecast in October, supported by rising demand growth from the stainless steel sector and for nickel-containing batteries,” he added.

Zinc was the worst performer of the SHFE base metals complex this morning, pressured by tightening spreads and elevated exchange inventories.

LME zinc stocks dipped 200 tonnes last Friday, but at 247,250 tonnes, have risen more than 36.6% since the start of the year.

SHFE zinc stocks similarly fell last week, declining 1,261 tonnes to 95,696 tonnes as of June 22 – but still up by 23.6% since January 5.

Base metals prices

• The SHFE August copper contract price edged up by 130 yuan per tonne to 52,000 yuan per tonne.
• The SHFE August lead contract price inched up by 25 yuan per tonne to 19,960 yuan per tonne.
• The SHFE August aluminium contract price was down by 30 yuan per tonne to 14,180 yuan per tonne.
• The SHFE September tin contract price decreased by 540 yuan per tonne to 145,560 yuan per tonne.
• The SHFE August zinc contract price inched up by 255 yuan per tonne to 22,830 yuan per tonne.

Currency moves and data releases

• The dollar index was up 0.05% to 94.54 as of 11.45am Shanghai time.
• In other commodities, the Brent crude oil spot price decreased 2.12% to $74.17 per barrel, and the Texas light sweet crude oil spot price was down 1.28% to $68.38 as of 11.46 am Shanghai time.
• In equities, the Shanghai Composite was up 0.17% to 2,894.74 as of 11.30 am Shanghai time.
• The economic agenda is light today with German Ifo business climate and new home sales from the United States.