Nickel Prices to Fluctuate Rangebound amid Pressure from US Dollar and Fundamentals Bright Spots

SHFE nickel fluctuated rangebound in the intraday session on Wednesday, falling 0.82% to close at 161,100 yuan/mt. The contract moved rangebound in the evening trading. LME nickel fell 1.61% to close at $19,770/mt.

Spot #1 nickel prices in Guangdong were quoted between 168,350-168,750 yuan/mt yesterday, with the average down 2,000 yuan/mt from the previous trading day to 168,550 yuan/mt. Jinchuan nickel plate prices were 166,500 yuan/mt, down by 2,000 yuan/mt from the previous trading day.

On the macro front, the minutes of the Fed meeting showed that inflation risks may require further tightening of policy; two Fed officials tend to keep interest rates steady in July. Most Fed officials see "significant" upside risks to inflation. Several participants warned of the risk of accidentally overtightening policy, with some seeing economic risks becoming more balanced. US industrial output rose by 1% month-on-month in July, which is expected to rise by 0.3%, and the previous value fell by 0.8%. The revised value of GDP in the second quarter of the euro area rose by 0.6% year-on-year, which is expected to rise by 0.6%, and the initial value rose by 0.6%.

The dollar rose against a basket of currencies after the Federal Reserve released minutes showing officials were divided on whether more rate hikes were needed at their last meeting. Fundamentally, the transaction in the pure nickel market improved slightly after the nickel price fell, and the cost of nickel sulfate supported the price to stop falling and stabilize. The future market of nickel and iron is expected to rise against the trend. The overall macro pressure is relatively high, and there are still bright spots in the fundamentals. Coupled with the rise of the RMB exchange rate, Shanghai Nickel is expected to fluctuate.

Operation suggestion: cautious