LME's New Regulations Put a Certain Pressure on Nickel Prices

SHANGHAI, Apr 3 (SMM) - Nickel prices dropped on subsided bullish macro factors last week. LME nickel trading during Asian hours resumed on March 27, but the trading volume and open interest stood at lows, which showed that investors still lacked confidence in market stability. In order to improve market liquidity, on the evening of March 30, LME announced a “fast-track” listing approach and fee reductions to new Class I nickel brands. In addition, LME considered coarse nickel powder as a deliverable Class I form and planned to launch Class II spot nickel products. On the whole, concerns about the shortage of forward deliverable products have eased, which cast a direct negative impact on nickel prices. On the fundamentals, SHFE nickel prices once fell after surging last Thursday. The spot prices hovered at lows, and the transactions were poor. In terms of NPI, stainless steel mills reduced production in March intensively, which was bearish for NPI prices, and they are less likely to ramp up production in April. The mills were less willing to restock amid the poor stainless steel consumption, and they lowered their purchase prices. On the demand side, according to SMM research, there have been more inquiries and transactions for NPI recently, and the prices trended lower. Tsingshan Group disclosed the bid prices. The cost support also declined greatly. News said that a stainless steel mill in east China had partially resumed production, thus the futures prices hovered at lows. Alloy companies' purchasing volume of pure nickel grew amid the falling nickel prices. To sum up, the recent macro situation remains stable, but the implementation of the new LME regulations may suppress the prices to a certain extent.