Base metals prices on the Shanghai Futures Exchange were mostly up during Asian morning trading on Friday January 25, with the complex following the stronger tone set by the London Metal Exchange three-month base metals prices on Thursday. Only SHFE copper and aluminium prices were weaker during Friday morning trading, albeit marginally, with these prices likely succumbing to the mounting pessimism surrounding the ongoing US-China trade negotiations and the wider effects that the trade conflict has had on economic growth in China.

“The US Commerce Secretary said the US and China were miles from resolution, but later said there was still a fair chance of a deal. This comes as both sides prepare for further talks in the US,” ANZ Research’s David Plank said in a morning note.

Despite this, lead, zinc, nickel and tin prices on the SHFE were all firmer this morning, tracking similar moves by the LME three-month base metals prices on Thursday.

Nickel led the advance with the metal’s most-traded May contract climbing to 94,580 yuan ($13,927) per tonne as at 9.59am Shanghai time, up by 990 yuan or 1.1% from Thursday’s close.

Nickel’s underlying fundamentals are likely to remain supportive, according to Fastmarkets analyst James Moore.

“The International Nickel Study Group (INSG) forecast the refined nickel market to record a further 33,000-tonne deficit in 2019 after the 118,700-tonne deficit in January-October 2018,” Moore said.

“The supply-demand picture for stainless steel in China is not expected to experience any major changes in 2019 compared with last year as authorities have restricted the construction of any new crude steel capacity,” he added.

On the supply side, nickel stocks at SHFE-listed warehouses totaled 13,884 tonnes on January 18, down by 75% from 57,165 tonnes a year ago.