Low Pure Nickel Stocks and Continuously High Premiums Opened the Door to Carnivals for Bulls

SHANGHAI, Jan 17 (SMM) - The nickel prices continued its strong momentum last week as the pricing logic driven by pure nickel has not changed fundamentally. The social inventory of pure nickel and the inventory in the bonded area continued to decline last week. The market’s expectations over concentrated arriving shipments still failed to materialise. The open interest of SHFE nickel continued to increase. This week, it is expected that the arrival of pure nickel in the market will still be limited, and it is estimated the inventory will not increase significantly. It is possible that the situation of low inventory and sustaining high premiums be unchanged.

From other perspectives on the fundamentals, downstream stainless steel and nickel sulphate enterprises were still actively stocking up before the CNY holiday. And the fundamentals are unlikely to weaken too much in the short term. Two potential factors may weaken the pure nickel prices in the short term, including a potentially earlier interest rate hike by the Fed, which will depress the market’s risk appetite. The other factor is when the arriving shipments of pure nickel exceed market expectations. It is expected that the nickel prices will run at 160,000~170,000 yuan/mt this week, and the LME nickel prices will move between $22,200-23,000/mt.