SMM Nickel Market Daily Review (2015-5-11)

SHANGHAI, May 12 (SMM) – SMM #1 nickel prices were between RMB 105,000-110,200/mt. Jinchuan Group only raised prices by RMB 500/mt as SHFE and LME zinc prices remained stable. Premiums of Jinchuan nickel fell to RMB 4,200/mt against prices for the most actively traded contracts on the Wuxi electronic trading. Downstream buying interest was weak, with traded prices between RMB 105,600-110,100/mt. Traders were sourcing new goods from Jinchuan Group, causing discounts of Russian nickel to expand to RMB 600/mt. Downstream buyers are expected to replenish stocks soon, and traded prices were between RMB 105,600-110,200/mt. Jinchuan raised ex-works prices by RMB 500/mt to RMB 110,500/mt.

SMM surveyed 30 market players to find that 14 are bullish, 13 are neutral and 3 are bearish toward nickel prices this week.

The 47% bullish investors see LME nickel prices rising to USD 14,500-15,000/mt. China lowered interest rate again, which will benefit real economy. Jinchuan Group holds prices firm. Nickel consumption in South China increased, and demand should improve in May due to the peak demand month. A large inflow of capital will also boost nickel prices. SHFE 1507 nickel contract prices will rise to RMB 114,000-117,000/mt.

43% are neutral toward nickel prices, believing LME nickel prices will move between USD 14,200-14,500/mt. Global demand is relatively weak, and a strengthening US dollar index, combined with economic pressure in China should weigh on base metals prices. There has been a large inflow of capital, and investors should turn cautious after price surged. SHFE 1507 zinc contract prices will fluctuate between RMB 112,000-114,000/mt.

10% are bearish, thinking LME nickel prices will fall to USD 14,000-14,200/mt. The US dollar index is expected to regain ground. China’s further interest rate hike means sluggish economy. China’s port nickel ore inventories grew, and exports from the Philippines returned to normal level. As large NPI producers reach full operation, NPI output should grow. In addition, favorable SMM/LME nickel price ratio should precipitate additional inflows of imported nickel. SHFE 1507 nickel contract prices will move between RMB 110,000-112,000/mt.