What’s Nickel Price Outlook after 5% Drop? SMM Reports

SHANGHAI, May 8 (SMM) – Last Friday, LME nickel slid to $8,905 per tonne, down from April’s high of $10,375 per tonne, closing the week down by more than 5 per cent.

SMM attributes the big decline last week to combined results from macro-economy, news and market fundamentals.

China Nickel Ore Inventories Fall after Slight Increases for Two Weeks, SMM Reports 

On the macro front, US reported positive data of both ADP and ISM non-manufacturing, and market expectations over US’s June rate hike grew after its decision to leave its rate unchanged in May’s meeting. Meanwhile, iron ore prices hit the downward limit, and crude oil tumbled by over 9 per cent, and base metals also dropped across the board.

Moreover, the news on Wednesday that the CA rejected the appointment of Lopez as Environmental Secretary raised market doubts over its ore supply concerns from environmental crackdown in the country. After the news, LME nickel erased earlier gains, and lost 3.3 per cent.

China NPI Output to Keep Falling in May on Output Cuts, SMM Foresees

Besides, ore shipments from the Philippines in April returned to the levels seen in Q2 2016 after the monsoon season in Surigao, a sign that whether or not Lopez will be appointed as Environmental Secretary will not greatly affect the country’s nickel ore shipments.

SMM latest survey finds that ore shipments from the Philippines were about 76 vessels in April, up about 26 from the preliminary result of 50 vessels, and also up from the level monitored the same period of last year. This, coupled with ore supplies from Indonesia, will lead to sufficient ore supply. However, downstream demand from China’s stainless steel sector is below market estimation since the beginning of May, with de-stocking underway.  

What’s the price outlook for nickel market this week?

“Economic data and market sentiment will serve as major two price factors this week,” SMM nickel analyst foresees.

Big losses and environmental factor have hit production enthusiasm at domestic NPI producers. Their production cuts will reduce ore demand, and the resultant ore price declines will ease production costs at domestic NPI producers. Meanwhile, price declines in domestic stainless steel market have been easing with continuous declines in inventories after production cuts. All these send a signal that nickel market fundamentals will have small room to deteriorate further.

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