SHANGHAI, Feb 14 (SMM) - In January, nickel prices showed a V-shaped trend as a whole.
On the macro front, the nickel prices retreated in early January when Fed’s chairman hinted at 5.1% final value of interest rate to control inflation, which suggested that interest rates would be further raised by at least 75 basis points in the coming months. Moreover, Fed's determination to rein in inflation in 2023 intensified market's concerns about economic recession, which put downward pressure on commodities.
On the news front, SMM survey showed that a new energy company in Hubei successfully produced electrodeposited nickel under a tolling agreement with Tsingshan. The preliminary planned capacity was 1,500 mt per month, some of which was scheduled to be released in January.
As a result, nickel prices tumbled under the negative impacts from both macro and news front. In late January, the market digested the negative factors and became optimistic that nickel prices would bottom out and rally after the Chinese New Year (CNY) holiday.
On January 30, the Minister of the Philippine Department of Environment and Natural Resources (DENR) said in his speech that the Philippines would like to participate in more links in the nickel industry chain instead of solely serving as an exporter of ROM. The potential ban on nickel ore exports that followed aroused market concerns about the nickel ore supply, sending nickel prices on an upward path.
Afterwards, the US Fed announced the interest rate cap on February 2, and the 25-basis-point rate hike was basically in line with market expectations, hence, the nickel prices stayed basically unaffected.
However, on the evening of February 3, the US Department of Labour announced that the seasonally adjusted non-farm payrolls rose by 517,000, beating the forecast of 185,000. This indicated that the resilient US economy might need more aggressive interest rate hikes in the future. In consequence, commodity prices faced downside pressure and nickel prices pulled back again.
On the other hand, affected by the nickel trading scam Trafigura encountered, nickel futures prices rallied as of February 9.
SMM believes that the scam may be a proof that the actual nickel inventory was lower than the nominal figure, and the aggravated concerns about nickel supply thus boosted the futures prices. However, in the long run, domestic new refined nickel capacity will ramp up in 2023, allowing the supply of pure nickel to further expand. In this sense, the elevated global visible inventory of pure nickel will weigh on nickel prices.
