Shanghai, Jul. 3 (SMM) – On Monday, mainstream traded prices for Jinchuan nickel were RMB 122,300-122,500/mt in the Shanghai nickel market, and RMB 122,300-122,500/mt for Russian nickel. Spot nickel prices followed suit after LME nickel prices advanced by nearly USD 600/mt last Friday. Trading, however, was thin, as downstream producers showed no buying interest after price increased. As a result, traders lowered prices in the afternoon business. Mainstream traded prices for Jinchuan nickel were RMB 122,300/mt, and RMB 120,000/mt for Russian nickel.
According to a recent SMM survey of price movements this week, 50% market players expect nickel prices to rally, and price gains may be significant. The two-day EU summit concluded with an agreement on a joint bank supervisor for the euro zone, and allowing the European Stability Mechanism (ESM) to aid euro-zone banks. The agreement provided relief to besieged Spanish and Italian banks. As a result, the yielding of Spanish and Italian bonds dropped significantly. The easing of market concerns allowed LME nickel prices to rebound strongly. Market attention is now shifted to the European Central Bank’s interest rate meeting on Thursday, and the US non-farm job data due on Friday. Markets expect the ECB may cut the interest rate from 1.0% to 0.75%, and so the euro will be supported, and this will favor LME nickel prices. In the US, markets view that the US may loosen the monetary policy following the release of non-farm job data, and this will further support metals prices.
Approximately 30% believe nickel prices will fluctuate this week. These market players take a cautious stance, as they understand that the European debt issues have not made significant improvement, despite positive news from the EU summit.
The rest 20% market players expect nickel prices to drop due to weak demand. No large-scale production cuts or suspension have been heard at stainless steel mills, but a large number of mills have shifted to produce from # 300 stainless steel to #200 and #400 stainless steel, and this will reduce demand for nickel. Weak demand will not support higher nickel prices, and instead will drag down prices.