Shanghai, Jul. 24 (SMM) – On Monday, Jinchuan Group cut ex-works prices for refined nickel to RMB 116,000/mt (large panel), and RMB 117,200/mt (small in barrel), down RMB 3,000/mt. In the Shanghai nickel market, mainstream traded prices for Jinchuan nickel after price cuts were between RMB 116,600-117,000/mt, and RMB 114,900-115,200/mt for Russian nickel. Price reductions failed to generate buying interest, and the market was dominated by a strong wait-and-see posture. In the afternoon business, spot nickel prices moved lower with plunging LME nickel prices. Prices for Jinchuan nickel slid to RMB 116,500/mt, and MRB 114,000/mt for Russian nickel. Sharp price losses added to market’s wait-and-see stance, with no deals reported.
According to the SMM survey of price trends this week, 50% players expect LME nickel prices to move between USD 15,300-15,800/mt, and Shanghai nickel spot prices will stabilize in the RMB 113,000-117,000/mt range, with no sharp declines expected in the short term. LME nickel prices staged marked declines last Friday and this Monday, and set a new low since 2009. With the lack of further downward momentum, prices should keep fluctuate this week, and wait for a clear market direction.
Approximately 40% believe nickel prices will continue to drop this week. At present, nickel demand from stainless steel mills have dropped significantly along with the arrival of a weak demand period and negative impact from NPI price cuts. Downstream demand will hardly improve this week, and this will provide no support for nickel prices.
Moreover, Valencia, Spain's most indebted region, asked around 2 billion euros in aid from the government. Reports also said Spain’s eastern region of Murcia would seek some 200-300 million euros from the government. German media reports Sunday that IMF hinted EU that no more financial help will be given to Greece. The European Central Bank also announced to stop accept Greek bonds as collateral, until EU, ECB and IMF completes the evaluation over Greece’s debt issues.
Besides, downward pressures are still available technically. Hence, these market players expect LME nickel prices to slid as low as USD 15,000/mt, and may briefly fall below the price mark. In the Shanghai spot market, Russian nickel prices may dip to RMB 110,000/mt, but any declines will be slower compared with LME nickel due to costs support.
Despite strong market pessimism, around 10% players understand LME nickel prices will rebound this week. Last week, the Peoples’ Bank of China conducted seven-day reverse repos worth RMB 80 billion, and this was explained by markets as more easing measures will be taken. Meanwhile, these market players believe that the US and EU will take some necessary measures to boost economy. Furthermore, the Shanghai/LME nickel prices will rise along with falling LME nickel prices, and a higher ration may increase imports, and this will support prices. Besides, the shorts will book profits after sharp price declines, and then prices will rebound, and may rally above USD 16,000/mt. After rallies in the LME nickel market, Jinchuan nickel prices will return to RMB 119,000/mt.