LIVE FUTURES REPORT 28/06: SHFE base metals prices down ahead of G20 summit; Ni rises 0.2%

Base metals prices on the Shanghai Futures Exchange were mostly little changed to weaker during Asian morning trading on Friday June 28, with aluminium leading on the downside.

The most-traded August aluminium contract on the SHFE stood at 13,805 yuan ($2,008) per tonne as at 10.38am Shanghai time, down by 95 yuan per tonne, or 0.7%, from Thursday’s close of 13,900 yuan per tonne.

The rest of the complex broadly consolidated lower with losses ranged between 0.1% for August copper and 0.6% for August zinc. Nickel, as it has been throughout most of the week, was the most resilient of the SHFE complex with a gain of 0.2%.

A firmer US currency continues to exert downward pressure on the SHFE base metals. The dollar index, which measures the value of the US dollar against a basket of foreign currencies, was at 96.18 as at 10.39am Shanghai time. The index has remained above the psychological level of 96 since late on Wednesday.

That said, moves across the SHFE base metals were limited while market participants await developments from the first day of the Group of 20 (G20) summit in Osaka, Japan, on Friday.

Of particular importance will be a meeting between US president Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of the summit, where market participants are hoping for a clearer indication of how trade negotiations between the two countries are likely to progress.

“This appears to be a critical juncture for both sides and we should [see] some red lines moved on both sides. If they can’t iron out any concessions this weekend, markets will be in for a rude awakening,” Edward Moya, senior market analyst from online trading services provider Oanda, said in a morning note.

Key data releases scheduled later on Friday include the United States’ PCE price index, the Federal Reserve’s preferred gauge of inflation. This release should garner much of the market’s attention particularly while the US central bank considers whether to cut interest rates.

This is also likely to keep investors subdued on Friday.

In nickel, prices remained firm this morning, benefitting from steady downstream demand and strength in nickel prices on the London Metal Exchange overnight.

The three-month nickel price on the LME ended Thursday up by around 2% at $12,710 per tonne – the highest since April.

In addition, increasing demand for stainless steel in China has also helped offset the rising risk aversion in the market, giving prices an extra boost.

Other highlights

  • The dollar index dipped by 0.04% at 96.18 as at 10.39am Shanghai time.
  • The Shanghai Composite edged down by 0.88% to 2,970.42 as at 11.33am Shanghai time.
  • In US data on Thursday, the third and final revision of annualized gross domestic product (GDP) for the first quarter was 3.1%, in line with expectations and unchanged from the previous reading. Pending home sales rose by 1.1% in May compared with the prior month, in line with analysts’ forecasts, while unemployment claims for the week ended June 22 stood at 227,000, above the expected 220,000.
  • It is a busy day for data on Friday with the United Kingdom’s current account and final revision of first-quarter GDP, the European Union’s consumer price index (CPI) flash estimate and US releases that include the PCE price index, personal spending, Chicago purchasing managers’ index (PMI) and the University of Michigan’s consumer sentiment and inflation expectations of note.
  • In addition, the first day of the G20 summit in Osaka gets underway on Friday. With world leaders gathering at the event, and a few notable meetings scheduled on the sidelines, market participants will be keeping a close eye on any developments.