Sluggish consumption and inflated prices are the leading two reasons behind SMM’s estimation. 

 

LME nickel prices surged all the way since the introduction of Indonesia’s ban on unprocessed ore early this year, hitting $22,000 per tonne in early May. Despite supply disruption of ore, LME nickel inventories kept growing, bringing inventories up to 308,322 tonnes now, up 17.84% from the level on January 13, the first working day since the ban took effect on January 12. The continuous increase in inventories reflects weak nickel consumption, SMM believes.  

 

Meanwhile, domestic stainless steel plants are now unwilling to buy high-priced raw materials, both refined nickel and NPI, due to soft demand and inflated prices. Indonesia’s ore ban has raised market expectations over the fall in NPI, but domestic stainless steel producers show no great interest in buying NPI, whose price was now on bar with refined nickel, lending no support for nickel price hike. 

 

Besides, the drop in LME nickel positions, which fell to 217,517 lots on July 16 from 251,288 lots on May 14, also deprived the rising momentum of nickel prices, SMM understands.