SMM Morning Comment For Nickel Market On August 21

SHANGHAI, Aug 21 (SMM) –

On the macro front, the People's Bank of China issued the second-quarter monetary policy implementation report on August 17, indicating an intensified effort in macro policy regulation. The report mentioned that CPI is expected to gradually rise from August, showing a U-shaped recovery and a potential rebound in commodity prices. Furthermore, due to concerns stemming from the news about the Indonesia’s investigations into nickel ore mines, market sentiment has shifted towards worries about future nickel ore supply. As a result, nickel ore prices have remained relatively firm, leading to upward fluctuations in nickel prices. From a fundamental perspective, there was an accumulation trend in both social inventory and bonded zone inventory of nickel plates in the week ending August 18. Social inventory of nickel plates increased by 306 mt, while bonded zone inventory rose by 400 mt. According to SMM research, the supply was influenced by the sudden arrival of nickel plates from an overseas supplier in the week ending August 18, leading to an expectation of increased supply. On last Thursday evening, GEM applied to list its nickel brand on the LME, with a capacity of 10,000 mt per year. This marks the second domestically produced electrowinning nickel brand to apply for listing on the LME. It can be anticipated that as enterprises progressively meet the delivery requirements of the SHFE and LME, the deliverable products will expand once again. As a result, the risk of short squeeze in nickel futures is likely to decrease in the future. Simultaneously, with the increase in warrants, this could exert downward pressure on nickel prices. On the demand side, the demand for nickel plates in the alloy sector is still in the process of essential and periodic procurement. However, the purchasing sentiment has slightly decreased compared to the previous week. It is anticipated that the alloy demand in civil sector will be affected by lower raw material prices and declining orders, signaling the winding down of periodic procurement. For the stainless steel sector, there was robust trading activity in the 300-series stainless steel in the week ending August 18, which translated into improved sentiment among steel mills regarding raw material procurement. However, it's anticipated that production in the 300-series stainless steel might decline in the future. This is mainly due to the escalating costs of raw materials like nickel ore and NPI. This cost escalation could potentially lead to a decrease in demand for pure nickel. The pure nickel supply was influenced by overseas nickel plate arrivals, resulting in an ample supply, while demand growth was marginal. In summary, current nickel prices were primarily influenced by macro factors in the week ending August 18. It's expected that nickel prices will experience a volatile movement in the week ending August 25.