Nickel Futures Prices to Under Pressure on Uncertainty over the Macro Front

SHANGHAI, May 16 (SMM) - In April, the market mainly watched for whether the Fed rate hike might pause and if the economy might fall into a recession. In early April, the better-than-expected US non-farm payrolls seemingly boosted the market trades, suggesting that the US labour market remained resilient. In mid-April, the hawkish Fed officials basically agreed that the current anti-inflation policy had made no significant progress, so they insisted on continuing to raise the rates in the future. Some officials predicted that inflation would fall to 3.25% this year, and the fight against inflation would last longer. These hawkish views had a negative effect on commodity prices.

The FOMC announced on the evening of May 3 that it would hike the target interest rate from 4.75%-5.0% to 5.0%-5.25%, which was in line with expectations. The decision suggested that a Fed rate cut was unlikely given the inflation outlook, but there might be a short-term pause in rate hikes. On May 5, the US Department of Labour announced that the seasonally adjusted non-farm payrolls for April were 253,000. The good performance of the US economy  raised the likelihood that Fed would increase the rates further, which was bearish for commodity prices. In terms of fundamentals, the electrowinning nickel output is expected to increase in 2023, which, coupled with the uncertainty over the macro front, will weigh heavily on nickel prices.