LIVE FUTURES REPORT 06/12: Soft dollar supporting SHFE base metals prices; Ni bounces 1.8%

Base metals prices on the Shanghai Futures Exchange mostly edged upward during the morning trading session on Friday December 6, with a weak US dollar providing broad support to the complex.

The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was down by 0.02% at 97.37 as at 10.38 am Shanghai time. The index had been at 98.31 at roughly the same time on Monday.

Meanwhile, growing optimism that a partial trade deal between China and the United States would be concluded soon has also boosted sentiment in global markets. Reports on Wednesday suggested that US negotiators expected a phase one trade deal to be signed before December 15.

But market participants seemed reluctant to overreact to trade-related news, keeping gains across the SHFE base metals muted this morning.

Nickel outperformed its peers on the SHFE in the morning trading session; the alloying metal’s most-traded February contract rose to 105,760 yuan ($15,006) per tonne as at 10.23am Shanghai time, up by 1,820 yuan per tonne - or 1.8% - from the previous day’s close of 103,940 yuan per tonne.

The rebound in nickel comes after a week of declines and the most-traded February contract remains well below its close of 109,330 yuan on November 29.

Gains across the rest of the complex were more marginal: January copper was up by 90 yuan per tonne – or 0.2% - at 47,380 yuan per tonne while January zinc and lead were both up by 0.1% at 18,015 yuan per tonne and 15,080 yuan per tonne respectively.

January tin dipped by 0.1% to 138,950 yuan per tonne while February aluminium was the worst performer with a 0.5% drop to 13,760 yuan per tonne, with the latter overshadowed by a weak market conditions which has seen short sellers emerge.

“The aluminium market has been negatively impacted by China’s weak economy this year and demand [for the light metal] has been really weak. It is reasonable for investors to sell now because the price may continue to fall later on,” a trader source told Fastmarkets this morning.

Other highlights
  • The Shanghai Composite Index was up by 0.26% at 2,899.73 as at 11.30 am Shanghai time.
  • In European data on Thursday, German factory orders fell by 0.4% month on month in October, below the forecast 0.3% increase and previous month’s 1.5% rise.
  • In US data on Thursday, the trade deficit narrowed more than expected to $47.2 billion in October, compared with $51.1 billion a month earlier. Factory orders ticked up by 0.3% month on month in October, in line with analysts’ forecasts.
  • In data on Friday, market participants will be paying attention to the US monthly employment report, which is a key indicator of the country’s economic health.

Hui Li

hui.li@fastmarkets.com

Published

Hui Li

December 06, 2019

05:25 GMT

Shanghai