SMM Nickel Market Daily Review (2015-9-28)

SHANGHAI, Sept. 29 (SMM) – SMM #1 nickel prices were between RMB 75,700-76,600/mt. Premiums of Jinchuan nickel against the most actively traded contracts on the Wuxi electronic trading were RMB 200/mt in the morning, with traded prices between RMB 76,300-76,400/mt. Discounts of Russian nickel were RMB 200/mt, with traded prices between RMB 75,900-76,200/mt. Downstream buying interest was weak, with traded prices between RMB 75,900-76,400/mt. Downstream buyers continued to replenish stocks as nickel future prices rose slightly, with overall transactions quiet and traded prices between RMB 76,100-76,400/mt.

SMM surveyed 30 market players to find that 5 are bullish, 20 are neutral and 5 are bearish.

The 17% optimistic ones believe LME nickel prices will move between USD 9,980-10,100/mt. Major economic indicators from the US were mixed last week. US House of Representatives Speaker John Boehner unexpectedly resigned, adding market uncertainty whether the Fed will raise interest rate in December. The US dollar surged initially then fell back. Downstream buyers replenished stocks actively last week during the September-October boom season, improving production. However, NPI producers maintained production low and held back goods. Supplies are mainly from goods under lien. Nickel ore inventories at Chinese ports also fell, giving support to nickel prices. Positions on SHFE 1601 nickel will continue to increase, with prices moving between RMB 77,500-78,000/mt.

66% see LME nickel prices hover between USD 9,850-10,000/mt. Profit at China’s large industrials dropped mostly significantly in August, weighing down commodity prices. Downstream buyers bought modestly ahead of China’s National Day holiday, with market remaining cautious. SHFE 1601 nickel contract prices will fluctuate between RMB 76,800-77,500/mt.

17% are bearish, believing LME nickel prices will fall to USD 9,750-9,850/mt. Profit at China’s large industrials posted its largest declines to date in August, pointing to a downshift in China. China’s official and Caixin’s PMI in September are not promising. Despite falling supply of NPI and nickel ore, stainless steel plants continue to expand their capacity. SHFE 1601 nickel contract prices will fall to RMB 76,000-76,800/mt.