SHFE nickel, aluminum futures drop, copper edges higher

As of the close of Friday's daytime trading session, the most-traded October contracts for nickel and aluminum ended at Yuan 121,310/tonne ($16,994/t) and Yuan 20,695/t, down by 0.3% and 0.2% from the previous week, respectively.

In contrast, the October copper contract closed 0.9% higher on week at Yuan 80,140/t by 3:00 p.m. on September 5.

The on-week increase in copper futures was largely supported by both macroeconomic sentiment and seasonal demand expectations, according to market analysts.

In the U.S., weaker labor data heightened the likelihood of an interest rate cut by the country's Federal Reserve this month, which boosted sentiment in global base metals markets. According to the ADP employment report released on September 4, the U.S. private sector added 54,000 jobs in August, below the forecast of 68,000 and lower than July's 104,000. The slowdown in job growth increased expectations for monetary easing, which in turn supported copper futures prices on the SHFE.

Still, some uncertainty remains, with global investors awaiting the release of the U.S. non-farm payrolls data later on Friday, market analysts added. 

Regarding metal fundamentals at home, market participants anticipate stronger copper consumption during China's traditional "golden September and silver October" peak demand season further underpinning sentiment in the domestic copper market.

Meanwhile, during the same August 29-September 5 week, SHFE warehouse inventory data also posted contrasting changes. By September 5, copper stocks in the exchange's bonded and standard warehouses had risen by 2.6% from a week earlier to 81,851 tonnes, while nickel inventories had increased by 2.1% on week to 26,986 tonnes.

Aluminum stocks, however, declined by 1.2% from August 29 to 124,078 tonnes.

Written by Iris Pang, pangjunyu@mysteel.com