LIVE FUTURES REPORT 30/04: SHFE base metals prices mixed following disappointing China data; nickel drops 0.6%

Base metals prices on the Shanghai Futures Exchange were mixed during morning trading on Tuesday April 30 after disappointing data from China did little to inspire much activity ahead of the country’s upcoming Labor Day holiday.

Nickel gave the worst performance of the SHFE base metals, with its most-traded June contract falling to 97,830 yuan ($14,529) per tonne as at 10.29am Shanghai time, down by 630 yuan per tonne or 0.6% from Monday’s close of 98,460 yuan per tonne.

The weaker showing in nickel follows disappointing data releases from China early on Tuesday.

China’s manufacturing purchasing managers’ index (PMI) unexpectedly fell to 50.1 in April, from 50.5 in March. Market expectations had been for an increase to 50.7. A reading above 50 indicates expansion, while below signals contraction.

The country’s non-manufacturing PMI similarly disappointed with an unexpected fall to 54.3 in April, from 54.8 in March. Consensus had been for an increase to 55.

China’s Caixin manufacturing PMI also missed expectations with a drop to 50.2 in April from 50.8 previously. April’s reading was well below the 51 that had been expected.

The disappointing data has stirred up concern that the Chinese government’s efforts to stimulate the economy are having a muted impact.

“The manufacturing data shows a weak but stable economy in China – but there are no signs of an uptrend,” a Shanghai-based analyst said.

This along with the upcoming long May Day weekend, and resultant limited activity, are keeping SHFE base prices under pressure, the analyst added.

China’s Labor Day holiday will begin on Wednesday and last until the end of the week.

Meanwhile, the more pronounced weakness in nickel compared with its peers on the SHFE can be attributed to a less supportive fundamental backdrop, according to Fastmarkets MB analyst James Moore.

“The underlying fundamentals are likely to prove less supportive; the International Nickel Study Group (INSG) pegged the refined nickel market in a 5,700-tonne deficit in January-February and forecasts a deficit of around 33,000 tonnes in 2019 compared with the 127,600-tonne deficit in 2018 due to mine and nickel pig iron capacity additions,” Moore said.

Other highlights

  • A softer US dollar is providing some support to base metals prices.
  • While the dollar index was little changed at 97.84 as at 10.23am Shanghai time, the index remains well below a recent high of 98.35 on April 23 – its highest since June 2017.
  • The Shanghai Composite Index increased by 0.43% to 3,075.74 as at 11.30 am Shanghai time.
  • In US data on Tuesday, key releases include the Conference Board’s consumer confidence and the Chicago PMI.