SMM Nickel Market Daily Review (2015-5-18)

SHANGHAI, May 19 (SMM) – SMM #1 nickel prices were between RMB 101,400-106,100/mt. Nickel futures prices fell slightly in the morning, but premiums of Jinchuan nickel rose to RMB 3,600/mt against prices for the most actively traded contracts on the Wuxi electronic trading. Downstream buyers were inclined to purchase Russian nickel at RMB 101,500-105,600/mt. Nickel prices stabilized in the afternoon, some traders looked for sumitomo nickel on increasing downstream inquiries, but trading did not improve, with traded prices between RMB 101,700-105,700/mt. Jinchuan Group lowered prices by RMB 1,500/mt to RMB 108,000/mt.

SMM surveyed 30 market players to find that 7 are bullish toward nickel prices this week, 12 are neutral, and 11 are bearish.

The 23% optimistic ones see LME nickel prices rising to USD 14,000-14,200/mt. Sluggish economic indicators from the US weighed down the US dollar index. The Fed will not raise interest rate soon, either, positively affecting base metals prices. Home prices in China’s 70 medium and large cities increased in April. Besides, China’s port inventories also fell as demand grew, boosting nickel ore prices, and giving support to nickel prices. SHFE 1507 nickel contract prices will rise to RMB 110,000-112,000/mt.

40% think LME nickel prices will hover between USD 13,600-13,900/mt. A falling US dollar index and the delay of interest rate hike by the Fed will bolster base metals prices. But Jinchuan Group increased supply. When combined with a large inflow of imported nickel, and capacity release at large domestic NPI producers, SHFE 1507 nickel contract prices will move between RMB 107,000-109,500/mt.

37% see LME nickel prices falling to USD 13,300-13,600/mt. A series of economic indicators from the US including housing starts and existing home sales slated for release this week are optimistic, which will drive up the US dollar index and weigh down base metals prices. Demand has yet to improve significantly. When coupled with capacity release at domestic large NPI producers and supply from Jinchuan Group, SHFE 1507 nickel contract prices should fall to RMB 104,000-107,000/mt.