SMM Nickel Market Daily Review (2015-4-7)

SHANGHAI, Apr. 8 (SMM) – SMM #1 nickel prices were between RMB 99,900-100,200/mt. LME and SHFE nickel prices dived in the morning due to prevailing shorting. SHFE 1507 nickel contract prices closed at RMB 95,990/mt in the morning session. Discounts on Russian nickel against Jinchuan nickel widened RMB 1,600/mt due to ample supply of Russian nickel. Spot transactions were quiet due to falling zinc futures prices, with traded prices between RMB 96,900-98,900/mt. Zinc futures prices stabilized in the afternoon, while spot nickel prices fell slightly further as traders sold off goods and due to imported nickel glut, leaving downstream buyers out of the market. Jinchuan Group hiked prices by RMB 500/mt to RMB 100,000/mt.

SMM surveyed 30 market players to find that 4 are bullish toward nickel price trends, 10 are neutral, and 16 are bearish.

The 13% optimistic market participants think LME nickel prices will move between USD 12,900-13,250/mt this week. Concerns over US economic growth weighed on the US dollar index. When combined with rebounding crude oil prices, base metals prices should stabilize. A growing number of NPI producers suspended production due to strict environmental protection inspections, causing NPI supply to fall further. Nickel ore inventories also fell, which should bolster LME nickel prices to rebound.

34% are neutral, seeing LME nickel prices hovering between USD 12,650-12,950/mt. A rising US dollar index should weigh on base metals prices again. Nonetheless, strict environmental protection inspections, combined with falling NPI prices, should reduce NPI supply further and will underpin nickel prices.

53% think LME nickel prices will fall to USD 12,500-12,650/mt. Despite mixed economic indicators from the US, US economy is expected to improve further, which will help increase the US dollar index. Crude oil prices, however, will drop again against high inventories and output, which will drag down base metals prices. Prevailing shorting and a large influx of imported nickel will also weigh down nickel prices. Nickel ore exports by the Philippines also increased. SMM understands large shipments of nickel ore will arrive soon. This, coupled with falling high-grade nickel ore prices, will pull down LME nickel prices.