LIVE FUTURES REPORT 31/01: SHFE nickel prices continue to correct lower; copper most resilient

The most-traded SHFE May nickel contract price stood at 101,990 yuan ($16,113) per tonne as of 10.01am Shanghai time, down by 1,790 yuan or 1.7% compared with the previous session’s closing price of 103,780 yuan per tonne.

This follows a day of weakness on Tuesday, where the three-month nickel price on the LME declined by $455 to $13,350 per tonne.

The arbitrage window between the LME’s three-month nickel contract and the Wuxi Stainless Steel Exchange’s most-traded February nickel contract continues to hover at a loss of around $355 per tonne, compared with a loss of $290 per tonne a week ago.

“The sustained losses on importing nickel into China following the increase in import taxes for the metal has deterred inquiries for refined nickel,” Metal Bulletin senior nickel analyst Ellie Wang said.

The import arbitrage is expected to remain negative in the first quarter of this year due to the high level of domestic refined nickel stocks and weaker demand from China’s stainless steel sector, according to Wang.

Copper prices showed the most resilience this morning, likely buoyed by the continued weakness in the dollar, but were broadly unchanged from the previous session’s close.

The March Copper contract on the SHFE was little changed at 52,980 yuan per tonne, up by just 10 yuan from Tuesday’s close.

The dollar index was flat at 89.17 as of 10.53 am Shanghai time, but is down from a reading of 89.45 at roughly the same time on Tuesday.

Rest of metals lower

• The SHFE March zinc contract price decreased by 205 yuan or 0.8% to 26,625 yuan per tonne.
• The SHFE May tin contract price fell by 190 yuan or 0.1% to 149,830 yuan per tonne.
• The SHFE March lead contract price dipped by 135 yuan or 0.7% to 19,405 yuan per tonne.
• The SHFE March aluminium contract price decreased 25 yuan or 0.2% to 14,445 yuan per tonne.

Currency moves and data releases

• The dollar index was flat at 89.17 as of 10.53 am Shanghai time.
• In other commodities, the Brent crude oil spot price was down by 0.05% at $68.00 per barrel as of 11.36 am Shanghai time.
• In equities, the Shanghai Composite was up by 0.17% at 3,493.99 as of 11.37 am Shanghai time.
• In US data on Tuesday, the CB consumer confidence index rose to 125.4 in January from 123.1 previously, but was still well below November’s 128.6, which was the highest since 2000.
• In data today, China’s manufacturing purchasing managers’ index (PMI) for January was lower than expected with a reading of 51.3 – the index had been expected to dip to 51.5 from 51.6 in December. Growth in China’s services industry, however, picked up, with the official non-manufacturing PMI rising to 55.3 from 55 in December.
• US President Donald Trump is currently delivering his State of the Union Address in Washington DC.
• Later today, there is a host of preliminary consumer price index (CPI) data out across Europe and the United States as well the EU’s unemployment rate. Other US data including ADP non-farm employment change, the employment cost index, pending home sales and crude oil inventories are also due.
• In addition, there is the US Federal Open Market Committee’s interest rate decision and statement. Although no interest rate hike is expected, markets will likely remain cautious over the wording of the accompanying statement.