SHFE nickel, copper futures fall, while aluminum rises

By 3 p.m. on Friday, the SHFE's most-traded December nickel contract had fallen by 1.3% on week to close the daytime trading session at Yuan 120,590/tonne ($16,955/t), while the December copper contract had also declined by 0.8% on week to Yuan 87,010/t. In contrast, the December aluminum contract inched up by 0.4% on week to Yuan 21,300/t. 

The on-week decreases in nickel and copper futures largely stemmed from market concerns over the U.S. Federal Reserve's December interest rate decision and China's post-peak seasonal demand, according to market analysts.

The U.S. Federal Reserve announced a 25-basis-point interest rate cut on Wednesday. However, Fed Chair Jerome Powell said at a subsequent press conference that another rate reduction in December was not a guarantee. The uncertainty dampened investor sentiment globally, weighing down the SHFE's non-ferrous metal futures prices.

Signs of softening domestic demand for both nickel and copper reinforced market pessimism. As the end of China's "golden September and silver October" season is looming, purchases of the two non-ferrous metals by their end-user sectors remain sluggish, particularly amid a weak real estate market, leading to inventory build-up.

During the same week, the SHFE's warehouse stocks of the three metals showed movements that contrasted with their price trends. As of October 31, copper and nickel inventories in the SHFE-bonded and standard warehouses increased by 10.8% and 1.9% from a week earlier to 116,140 tonnes and 36,751 tonnes, respectively. On the other hand, aluminum stocks dropped by 3.9% on week to 113,574 tonnes.

Written by Iris Pang, pangjunyu@mysteel.com