LIVE FUTURES REPORT 15/05: SHFE base metals prices rebound on easing trade concerns; Ni climbs 1.3%

Base metals prices on the Shanghai Futures Exchange staged a broad recovery during morning trading on Wednesday May 15, supported by easing trade concerns that allowed the complex to reclaim some of the losses made earlier in the week.

“Industrial metals clawed back some of the losses from the recent selloff, as signs emerged that the US-China trade talks were back on track,” David Plank, analyst at Australia and New Zealand Banking Group (ANZ), said in a morning note.

“[US President Donald Trump] said he had a feeling further trade talks with China will be very successful. He also said that he hasn’t decided about whether to apply additional tariffs on the remaining $300 billion of Chinese imports,” Plank added.

The comments had a positive effect on markets overnight, easing concerns that trade talks had been completely derailed, and this has translated to follow-through strength on the SHFE this morning. As a result, SHFE base metals prices were up across the board with nickel leading the charge.

The most-traded July nickel contract on the SHFE stood at 96,930 yuan ($14,092) per tonne as at 10.35am Shanghai time, up by 1,280 yuan per tonne or 1.3% from Tuesday’s close of 95,650 yuan per tonne.

“Short-term wise, the enthusiasm for downstream procurement of nickel has improved and traders are a lot more active compared to previously,” an analyst with Chinese broker Citic Futures said in a morning report.

Still, analysts were cautious about being too optimistic.

“However, even with Trump’s words soothing markets for the moment, copper and the rest of the base metals sector will struggle while the trade conflict remains unresolved, even though fundamentals remain positive,” ANZ’s Plank said.

Other highlights
  • The dollar index was up by 0.01% at 97.53 as at 10.54am Shanghai time.
  • The Shanghai Composite was up by 0.93% at 2,910.31 as at 10.54am Shanghai time.
  • In US data on Tuesday, the National Federation of Independent Business (NFIB) small business optimism index rose to 103.5 in April, better than the expected 102.0. The country’s import prices rose by 0.2% year on year in April – below an expected increase of 0.7%.
  • Data already out on Wednesday showed a string of disappointing releases from China. Chinese fixed asset investment and industrial output both came in below forecasts with year-on-year growth of 6.1% and 5.4% respectively in April, while retail sales for the same month similarly disappointed with an increase of 7.2% from a year earlier.
  • Later on Wednesday, German preliminary gross domestic product (GDP) and EU flash GDP are due along with US releases that include retail sales, the Empire State Manufacturing Index, capacity utilization and industrial production.
  • In addition, US Federal Reserve governor Randal Quarles is due to speak later.

Karen Ng

karen.ng@fastmarkets.com

Published

Karen Ng

May 15, 2019

06:00 GMT

Singapore