SHFE nickel, copper futures rise, aluminum drops on week

As of the close of Friday's daytime trading session, the most widely-held nickel futures contract for May delivery had surged by 2.7% from a week earlier to Yuan 135,950/tonne ($19,668.4/t). Over the same period, the most-active April copper contract rose modestly by 0.3% on week to Yuan 100,630/t. In contrast, the main aluminum contract also for April delivery slipped by 0.5% from the previous week to close at Yuan 23,265/t.

The on-week jump in nickel futures was largely driven by recent news of a reduced mining quota for Indonesia's PT Weda Bay Nickel, the world's largest nickel mine, according to market analysts. On February 11, French mining company Eramet, one of the mine's joint owners, confirmed that the operation had been told that its ore production quota would be cut by 71.4% on year to 12 million tonnes in 2026, as the Indonesian government is trying to support nickel prices through output controls.

Concerns over a potential decline in nickel ore supply from Indonesia, the world's largest nickel producer, propped up the SHFE's nickel futures prices this week, market analysts added. 

On the other hand, China's primary aluminum market faced limited supply-side concerns, with domestic production remaining largely stable. Meanwhile, subdued end-user demand and ongoing stock accumulation ahead of the Chinese New Year holiday beginning on February 15 had weakened the outlook for post-holiday consumption, weighing on domestic aluminum futures.  

During the same week, inventories of the three metals held in SHFE-registered and bonded warehouses continued to increase. As of February 13, aluminum stocks had climbed by a further 21.3% from a week ago to 297,340 tonnes. Meanwhile, copper inventories also rose by 9.5% on week to 272,475 tonnes, while nickel stocks increased by 2.3% to 58,775 tonnes.

Written by Iris Pang, pangjunyu@mysteel.com