Reports on Tuesday that new tariffs on $160 billion of Chinese goods, expected to come into effect on Sunday, are likely to be delayed has provided a slight boost to market sentiment this morning though a final decision on a deferral remains in the hands of United States President Donald Trump.
That said, even with a delay in the tariffs being implemented, the specter of lingering trade uncertainty as we head into a new year is likely to keep a cap on participants’ appetite for risk.
Investors are also likely to be adopting a wait-and-see stance ahead of the US Federal Reserve’s rate decision later on Wednesday and the United Kingdom’s general election on Thursday.
Still, a softer dollar of late remains supportive of the base metals. The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was down by 0.03% at 97.49 as at 10.02am Shanghai time. This compares with a reading of 97.64 at around 12pm Shanghai time on Tuesday.
Nickel outperformed its peers this morning, with the metal’s most-traded February contract climbing to 107,290 yuan ($15,244) per tonne as at 11.30am Shanghai time, up by 2,130 yuan per tonne - or 2% - from Tuesday’s close of 105,160 yuan per tonne.
The gains in nickel are at odds with the metal’s fundamental backdrop, which has seen significant inflows at London Metal Exchange-registered warehouses recently while downstream demand in China remains weak.
On-warrant nickel stocks at LME warehouses rose to their highest since October after the largest one-day inflow since January 2016 on Tuesday. Yesterday’s net increase of 14,244 tonnes brought total stocks to 83,520 tonnes.
Meanwhile, China’s stainless steel sector - a major consumer of nickel - is said to have significant stockpiles while demand remains soft with the end of the year approaching, a Shanghai-based analyst said.
Fastmarkets’ weekly price assessment for stainless steel cold-rolled coil 2mm grade 304 domestic, ex-whs China
in the country’s major market of Wuxi was 14,400-15,000 yuan per tonne including value-added tax for the week ended December 4, down 300 yuan per tonne from a week earlier, due to the high amount of stocks available.
Gains were muted across the rest of the complex: the January copper contract was up by 0.04% to 48,710 yuan per tonne, the February aluminium contract edged up by 0.14% to 13,910 yuan per tonne, the January lead contract ticked up by 0.20% to 15,055 yuan per tonne and the May tin contract rose by 0.26% to 139,940 yuan per tonne.
Zinc was the lone metal to record a loss this morning, with its most-traded February contract sliding by 0.45% to 17,845 yuan per tonne.
- In data on Wednesday, the US Federal Open Market Committee (FOMC) will release its rate decision, statement and economic projections and will give a press conference. Other US releases of note include the consumer price index and crude oil inventories.