SMM Nickel Market Daily Review (2015-6-29)

SHANGHAI, Jun. 30 (SMM) – SMM #1 nickel prices were between RMB 90,800-91,900/mt. Premiums of Jinchuan nickel against the most actively traded contracts on the Wuxi electronic trading were RMB 200/mt in the morning. Trading improved recently as downstream buyers replenished stocks on slumping nickel prices, causing trading to improve, and with traded prices between RMB 89,800-90,800/mt. Nickel prices continued to fall in the afternoon and hit a record low. With Jinchuan nickel price dropping below RMB 90,000/mt, some traders began to hold back goods. Downstream buyers turned reticent, with traded prices between RMB 89,000-89,900/mt. Jinchuan Group lowered prices by RMB 1,000/mt to RMB 935,000/mt.

SMM surveyed 30 market players to find that 8 of them are bullish toward nickel prices, 17 are neutral and 5 are bearish.

The 27% optimistic ones think LME nickel prices will rise to USD 12,200-12,500/mt. The deposit reserve ratio and interest rate cut by the PBOC will help release liquidity. The China Securities Regulatory Commission (CSRC) is expected to pause IPO to help ease market panic. Chronic Greek crisis is also expected to reach some resolution. Positive economic indicators from the US mean domestic economy is recovering. Cargo holders have begun to hold back goods on slumping nickel futures prices. Meanwhile, the monsoon in the Philippines will cause nickel ore supply to decrease. In this scenario, LME nickel prices should rebound this week, and SHFE 1509 nickel prices will rise to RMB 92,000-94,000/mt.

56% neutral ones believe LME nickel price will fluctuate between USD 12,000-12,200/mt. Demand for nickel weakened significantly on the off-season and impact on domestic stainless steel plants from anti-dumping measures by other countries. As nickel prices have fallen below costs lines, cargo holders are unwilling to sell. But panic dominated the market. LME nickel prices should remain low in the near term, and SHFE 1509 nickel contract prices should move between RMB 90,000-92,000/mt.

17% see LME nickel prices falling to USD 11,800-12,000/mt. Growing likelihood of a Grexit will push up the US dollar, weighing down base metals prices. Interest rate and deposit reserve ratio cut by the PBOC will help release liquidity, but will not contribute to nickel demand in the near term. Falling nickel prices also caused selloffs of finance-driven imports, further pushing down nickel prices. SHFE 1509 nickel contract prices will move between RMB 88,000-90,000/mt.