SHANGHAI, January 29 (SMM) –
The SHFE nickel market showed strong resilience at a lower level and surpassed the 130,000 yuan/mt mark last Friday. Market sentiment received a boost from a series of favorable macro news, significantly lifting SHFE nickel prices. Foreign media first reported the closure of the Kambalda mine in Western Australia due to the prolonged slump in nickel prices, and according to SMM research, the mine is one of BHP's nickel raw material suppliers. At the same time, Canadian miner First Quantum Minerals has temporarily halted mining operations at its Ravensthorpe nickel mine in Western Australia. This could impact the company's raw material supply in the second quarter of this year. Additionally, the delayed Reserve Base Metal Quotas (RKAB) has provided support to nickel prices. On the macro front, the market focused on the US December core PCE price index last week, with GDP reports indicating a slight decrease in US inflation. The data reveals robust economic growth in the United States, with a year-on-year increase of 3.3% in the fourth quarter of 2023 compared to the previous year. Meanwhile, the week ending January 19 saw an increase in US initial jobless claims, reaching 214,000, indicating signs of weakness in the current employment market. Although market expectations for a potential interest rate cut by the Federal Reserve in March remain cautious, given the faster-than-expected economic growth and some alleviation of inflationary pressures, there is a widespread belief that the Fed might start cutting rates in the first half of this year. In terms of fundamentals, nickel inventories showed an accumulating trend last week. SMM discovered that a substantial part of the recently acquired inventories is made up of nickel briquettes. This is mainly due to a large influx of nickel briquettes arrivals, and the high nickel prices are suppressing downstream stocking sentiments. In terms of output, with the rise in nickel prices boosting the recovery of pure nickel production profits, some refining nickel producers that may have previously reduced production are still maintaining high operating rates last week. Coupled with the introduction of some new production capacity, it is expected that the supply of pure nickel will be relatively ample. On the demand side, as the Spring Festival holiday approaches, downstream enterprises are gradually entering holiday mode. Purchasing pace is slowing down, leading to a decrease in overall activity in the spot market. In summary, because mining output has decreased and there's anticipation of interest rate cuts, short-term nickel prices could rise. However, the potential is limited due to a mismatch in the fundamental supply and demand for pure nickel. The current SHFE nickel market reflects a mix of bullish and bearish sentiments, displaying some resilience prior to the holiday.
The SHFE nickel market showed strong resilience at a lower level and surpassed the 130,000 yuan/mt mark last Friday. Market sentiment received a boost from a series of favorable macro news, significantly lifting SHFE nickel prices. Foreign media first reported the closure of the Kambalda mine in Western Australia due to the prolonged slump in nickel prices, and according to SMM research, the mine is one of BHP's nickel raw material suppliers. At the same time, Canadian miner First Quantum Minerals has temporarily halted mining operations at its Ravensthorpe nickel mine in Western Australia. This could impact the company's raw material supply in the second quarter of this year. Additionally, the delayed Reserve Base Metal Quotas (RKAB) has provided support to nickel prices. On the macro front, the market focused on the US December core PCE price index last week, with GDP reports indicating a slight decrease in US inflation. The data reveals robust economic growth in the United States, with a year-on-year increase of 3.3% in the fourth quarter of 2023 compared to the previous year. Meanwhile, the week ending January 19 saw an increase in US initial jobless claims, reaching 214,000, indicating signs of weakness in the current employment market. Although market expectations for a potential interest rate cut by the Federal Reserve in March remain cautious, given the faster-than-expected economic growth and some alleviation of inflationary pressures, there is a widespread belief that the Fed might start cutting rates in the first half of this year. In terms of fundamentals, nickel inventories showed an accumulating trend last week. SMM discovered that a substantial part of the recently acquired inventories is made up of nickel briquettes. This is mainly due to a large influx of nickel briquettes arrivals, and the high nickel prices are suppressing downstream stocking sentiments. In terms of output, with the rise in nickel prices boosting the recovery of pure nickel production profits, some refining nickel producers that may have previously reduced production are still maintaining high operating rates last week. Coupled with the introduction of some new production capacity, it is expected that the supply of pure nickel will be relatively ample. On the demand side, as the Spring Festival holiday approaches, downstream enterprises are gradually entering holiday mode. Purchasing pace is slowing down, leading to a decrease in overall activity in the spot market. In summary, because mining output has decreased and there's anticipation of interest rate cuts, short-term nickel prices could rise. However, the potential is limited due to a mismatch in the fundamental supply and demand for pure nickel. The current SHFE nickel market reflects a mix of bullish and bearish sentiments, displaying some resilience prior to the holiday.
