Base metals prices on the Shanghai Futures Exchange were mostly little changed during morning trading on Wednesday March 6, with the complex in consolidation mode after weakness on Tuesday. Renewed concerns over an economic slowdown in China following disappointing macroeconomic data releases from the country and reports that the Chinese government had lowered its gross domestic product (GDP) growth target this year continues to deter commodity investment. Speaking at the opening session of the National People’s Congress (NPC) in Beijing on Tuesday, Chinese premier Li Keqiang announced that the country’s government is targeting GDP growth of 6-6.5% in 2019 – less than the 6.6% GDP growth reported last year.

At the same time, broad strength in the US dollar also continues to dampen investors’ appetite for risk assets such as the base metals.

The dollar index, at 96.88 as at 10.20am Shanghai time, is up from 96.69 at a similar time on Tuesday. The index briefly climbed above 97 on Tuesday to reach a high of 97.01 – its highest since February 19.

But other news out of the NPC meeting on Tuesday was more market-friendly, limiting the downside for SHFE base metals prices.

One of the main messages from Premier Li’s speech was that the Chinese government will continue to implement a proactive fiscal policy and prudent monetary policy in 2019 to promote a sustained and healthy development of domestic industries. Specific measures mentioned include a cut the value-added tax (VAT) rate that covers the manufacturing sector to 13% from 16%.

“In order to implement a larger scale of tax reduction and fee reduction to stimulate China’s slowing economy, the manufacturing tax rate will be reduced from 16% to 13%, which is obviously positive for the non-ferrous metals industry and has stimulated some enthusiasm toward base metal investment,” Chinese brokerage Guotai Junan Futures said in a morning note.

As a result, most base metals prices on the SHFE were little changed with a slight upward bias.

Nickel outperformed with the metal’s most-traded May contract on the SHFE climbing to 106,180 yuan ($15,832) per tonne as at 10.19am Shanghai time, up by 510 yuan per tonne or 0.5% from Tuesday’s close of 105,670 yuan per tonne.

The firmer performance by nickel in comparison with its peers comes amid greater fundamental support for the alloying metal.

“In regard to nickel’s fundamentals, a continuous decline in inventories and stronger demand from downstream stainless steel industry [in China] has lent support to the metal’s prices,” Guotai Junan Futures added.

Nickel stocks in London Metal Exchange warehousing system totaled 196,410 tonnes on March 5, the lowest since June 2013.

Deliverable nickel stocks in SHFE-listed warehouses totaled 11,005 tonnes on March 1, down by 26% from the 14,881 tonnes recorded at the beginning of the year.