LIVE FUTURES REPORT 30/11: Weak Chinese economic data caps SHFE base metals; strength in nickel continues

Base metals prices on the Shanghai Futures Exchange broadly consolidated during Asian morning trading on Friday November 30, with the market focused on the upcoming Group of Twenty (G20) summit in Argentina – where US President Donald Trump and his Chinese counterpart Xi Jinping are due to meet.

Nickel exhibited the most pronounced move among the SHFE base metals this morning, with prices for the metal continuing to gain against a backdrop of tightening supply and softer dollar.

The dollar index has recovered slightly from Thursday’s low of 96.62, which came after dovish language from US Federal Reserve chairman Jerome Powell late on Wednesday. The index had reached a high of 96.81 earlier this morning but has since dipped to 96.74 as at 10.54am Shanghai time.

This remains well below the index's recent peak of 97.70 on November 12.

“Markets have their sights fixed on Buenos Aires, where Trump and Xi plan to meet at the G20 meeting of world leaders over the weekend, and rightly so. A more conciliatory tone (or, dare I say, trade war breakthrough) would see risk assets respond rather positively. Indeed, markets have already been whipped around by news headlines, with equities lifting overnight on the US President’s comments that he is very close to doing something on China trade. However, gains were short lived as news that presidential adviser Peter Navarro (a known China hawk) will be at the meetings provided a dampener, ANZ Research’s Dan Been said on Friday.

“Investors likely to head into the weekend without any aggressive positioning. This should see a quiet end to the week for commodity markets,” Been added.

Capping base metals prices further was the release of Chinese economic data on Friday morning that failed to live up to expectations.

China’s official purchasing managers’ index (PMI) for the manufacturing sector in November was recorded at 50, below the forecast print of 50.2, according to the latest statistics released by China’s National Bureau of Statistics.

The 50-point mark is considered neutral territory, indicating no growth or contraction in activity. A reading above 50.0 indicates industry expansion, while below indicates contraction.

China’s non-manufacturing PMI for the same period dipped to 53.4 from 53.9 the previous month, indicating that growth in China’s service sector moderated in November, but remained at solid levels.

In aluminium, prices reacted negatively to the weak economic data from China; the most-traded January aluminium contract on the SHFE slid to 13,615 yuan ($1,960) per tonne as at 9.34am Shanghai time, down by 35 yuan per tonne or 0.2% from Thursday’s close.

“If the United States and China could not reach an agreement at the forthcoming G20 meeting, it would produce a renewed sell-off in risk assets and would be very negative for aluminium and its complex,” Fastmarkets research analyst Boris Mikanikrezai said.

Concerns that this year’s winter production restrictions in China are not as stringent as those seen in previous years have added further downward pressure to aluminium prices this morning.

Xinfa Group’s two aluminium smelters in the Chinese province of Shandong have been exempted from this year’s winter production curtailments, Fastmarkets MB reported on Thursday.

Nickel, however, managed to outperform its peers this morning amid persisting supply concerns due to low reported stock levels. The metal’s most-traded January contract on the SHFE rose to 90,980 yuan per tonne as at 9.34am Shanghai time, up by 1,060 yuan per tonne or 1.2% from Thursday’s close.

Nickel stocks in the Shanghai bonded zone stood at 27,000-35,000 tonnes on November 1, down from 40,000-45,000 tonnes a month earlier, according to Fastmarkets MB data.

Meanwhile, SHFE nickel stocks totaled 15,539 tonnes in the week ended November 23, down by 68.2% from the beginning of the year.

Base metals prices
  • The SHFE January copper contract price edged down by 30 yuan per tonne to 49,530 yuan per tonne.
  • The SHFE January aluminium contract price moved down by 35 yuan per tonne to 13,615 yuan per tonne.
  • The SHFE January zinc contract price rose by 85 yuan per tonne to 20,360 yuan per tonne.
  • The SHFE January lead contract price ticked up by 50 yuan per tonne to 18,240 yuan per tonne.
  • The SHFE January tin contract price eased by 10 yuan per tonne to 143,670 yuan per tonne.
  • The SHFE January nickel contract price climbed by 1,060 yuan per tonne to 90,980 yuan per tonne.

Currency moves and data releases
  • The dollar index went up by 0.05% to 96.81 as at 9.34am Shanghai time.
  • In equities, the Shanghai Composite edged up by 0.07% to 2,569.15 as at 10.14am Shanghai time.
  • In US data on Thursday, the core personal consumption expenditures (PCE) price index– the US Federal Reserve’s favoured inflation gauge – increased by 0.1% in October from the prior month, falling short of the forecast 0.2% month-on-month gain. Personal spending and income were better than expected however, with month-on-month rises of 0.6% and 0.5% respectively.
  • In data on Friday, China’s manufacturing and non-manufacturing PMI readings were both slightly below expectations at 50.0 and 53.4 respectively.
  • Later, we have a host of European releases including German import prices and retail sales, the United Kingdom’s nationwide house price index, French preliminary CPI as well as the European Union’s headline and core CPI flash estimates and unemployment rate.
  • US data of note on Friday includes the Chicago PMI.
  • In addition, US Federal Open Market Committee member John Williams is speaking and day one of the G20 summit in Argentina kicks off today.

London Metal Exchange, base metals prices

Shanghai Futures Exchange, base metals prices

Changjiang spot prices, base metals prices

Amy Lv

amy.lv@fastmarkets.com

Published

Amy Lv

November 30, 2018

04:50 GMT

Shanghai