LIVE FUTURES REPORT 20/12: SHFE base metals prices mixed; Ni outshines with 1.2% gain

Base metals prices on the Shanghai Futures Exchange were split into two camps during the morning trading session on Friday December 20, with nickel outperforming the rest of complex with a 1.2% gain.

The most-traded March nickel contract rose to 112,110 yuan ($15,995) per tonne at the close of the morning trading session, up by 1,330 yuan per tonne from Thursday’s close of 110,780 yuan per tonne.

The rest of the complex was split between gains in February copper (+0.5%) and February zinc (+0.3%) and slight losses in February aluminium (-0.2%), February lead (-0.2%) and May tin (-0.3%).

The overall firmer performance by the complex follows an upswing in sentiment after China announced on Thursday that it will exempt some United States chemical products from additional tariffs for a year, a move which comes after Beijing and Washington agreed to a much-anticipated “phase one” deal at the end of last week.

China will exempt the six products, including special synthetic resin, from additional tariffs from December 26 to December 25, 2020, according to the Customs Tariff Commission of the State Council.

But with a raft of data from the United Kingdom, European Union and US due later and the market in wind-down mode ahead of holidays next week, price movements across the SHFE base metals have been fairly limited in either direction.

The exception to this being nickel which is also finding support from both the improved macroeconomic backdrop and its robust fundamentals.

“The rebound in nickel prices since last week despite bearish micro signals suggests selling pressure has run out. Nickel is also becoming relatively more sensitive to the macro, which is brighter following the de-escalation of the US-China trade dispute,” Fastmarkets’ nickel analyst Boris Mikanikrezai said.

In terms of fundamentals, Indonesia’s looming ban on nickel ore exports from the beginning of next year is price-supportive and points to a tighter long-term picture following weaker refined production trends.

Data on the ground corroborates this view; the refined nickel market was in a 50,800-tonne deficit in January-September, according to the International Nickel Study Group, while World Bureau of Metal Statistics estimates the refined nickel market was in a deficit of 40,400 tonnes in January-October.

Other highlights
  • The dollar index was marginally higher this morning, up 0.04% at 97.44 as at 11.30am Shanghai time. This compares with a reading of 97.40 at a similar time on Thursday.
  • It is a fairly busy day for data on Friday with the United Kingdom’s final gross domestic product reading, current account, Bank of England quarterly bulletin and a Brexit vote due. A reading of the EU’s consumer confidence is also due.
  • US releases scheduled for later today include final GDP, the core PCE price index, personal spending and the University of Michigan’s revised consumer sentiment and inflation expectations.

Sally Zhang

sally.zhang@fastmarkets.com

Published

Sally Zhang

December 20, 2019

04:40 GMT

Shanghai