By Wang Chao
Nickel and tin futures were listed for trading on March 27 amid public embrace. Analysis of the listing prices of nickel and tin futures severally at RMB102,070 per ton and RMB120,190 per ton indicates opportunities of short-term buy-in for the first trading session. Meanwhile, investors pin hopes on cross-product arbitrage, especially about the nickel futures, whose metal attributes are bound to make it the chief target of arbitrage.
First trading day: opportunities for short-term buy-in
Insiders pointed out the listing price of nickel futures at home is mainly based on the settlement price on the London Metal Exchange (LME), which is now at a periodic low; judging from the newly listed products in the past, nickel futures is very likely to be chased after. Also, there’re two facts favorable for the market development: firstly, after Indonesia’s inhibition on raw ore export, there comes a gap in worldwide nickel ore supply, which is consuming the nickel ore inventory at Chinese ports; secondly, the continuing decline of price exerted strong cost impact on China’s nickel and pig iron enterprises.
Cheng Xiaoyong, Assistant Chief of Baocheng Futures and Finance Research Institute, remarked the benchmark listing price of nickel futures at RMB 102,070 per ton is so low as to cause price inversion between futures and spot, compared with the nickel spot price on the Shanghai market at RMB103,350 per ton on March 26. And considering the nickel price on the LME shows nearby-month discounts, it’s recommended to resort to short-term buy-in of active contracts and to forward contracts.
As for the tin futures, the listing price at RMB120,190 per ton is a little too low, compared with the tin spot price at RMB120,250 per ton on the Shanghai market on March 26. Judging from the cost of carry and the nearby-month discounts of tin price on the LME, it’s recommended to resort to short-term buy-in of active contracts or to forward contracts.
For long term: nickel bullish while tin dull
Market analysts believed the worldwide nickel ore supply in 2015 will show tight balance so that nickel price is expected to swing upward. The nickel price target in 2015 will be between US$19,000 and 20,000 per ton, while the average tin price will swing between US$20,000 and 22,000 per ton in 2015, with the worldwide supply and demand gradually turning from short supply to supply-demand balance.
Analyst Li Ying from Galaxy Securities forecasted the fluctuation range of nickel price is RMB103,100 to 104,210 per ton and that of tin price is RMB119,300 to 122,900 per ton based on estimation by quotations of the Shanghai Metals Market, storage fee, risk-free interest and various costs.
Researcher Guo Hua with Orient Futures pointed out the sharp fluctuations of nickel price in 2014 was mainly attributed to the supply of laterite-nickel ore. Since Indonesia’s inhibition on raw ore export, the import of laterite-nickel ore into China has dropped so that the market is sensitive to expected shortage and the nickel futures price on the LME once surged to US$21,600. With the rise of export and supply in the Philippines in May, the market gradually restored its expectation for shortage. In addition, Chinese enterprises that invest in building plants in Indonesia have largely added after the country’s inhibition on raw ore export, and statistics show that in September 2014, smelters constructed, under construction and planned for construction numbered 29, involving a total productivity of 625,000 tons of nickel metal equivalent. In the short term, it’ll be slow to have the productivity in operation so that it’s unlikely to be released in 2015. It’s estimated that the newly added production of nickelferrite in Indonesia can hardly cover the supply decrease caused by production halts in China.
As for tin, Guo believed with short supply worldwide and excess supply home, efforts in resource exploration will be upgraded. Tin resource recovery will be stepped up to maintain low-rate growth of production and consumption, and it’s estimated that production growth in the following 5 years will be about 1.5%, with a consumption growth of around 1%. The average tin price in 2015 will oscillate between US$20,000 and 22,000 per ton, and the worldwide supply and demand shall transition from short supply to supply-demand balance.
Relevant industries: to set new price benchmarks
Deputy Marketing General Manager Bao Xingwang of Jinchuan Group commented as an important strategic metal in China, the development of nickel industry must rely on a futures market where China holds the pricing power. In face of the sharp fluctuation of nickel price, Jinchuan Group, China’s largest nickel smelting enterprise, has a strong demand for the listing of nickel futures product, whose listing will facilitate the formation of market-oriented pricing mechanism in the industry, provide workable risk management tools for upstream and downstream enterprises on the industry chain, help enterprises curtail purchase costs and scoop operation profits, promote reasonable allocation of market resources and ensure sustainable development of the whole nickel industry.
General Manager Lu Peng of Tin and Nickel Department in China Minmetals Non-ferrous Metals Co., Ltd. commented that the listing of tin futures on the SHFE will set up a legitimate, open, fair and just futures trading platform for home producers, traders and consumers of tin, generate a standardized price discovery mechanism of tin commodity, and endow trade participants with a new way of trading and of hedging.
Products Specs
Trading Calender
Fees
Rules
Education
Back to Top
沪公网安备 31011502008304号