SMM Nickel Market Daily Review (2015-11-2)

SHANGHAI, Nov. 3 (SMM) – SMM #1 nickel prices were between RMB 75,900-76,700/mt on November 2. Discounts of Jinchuan nickel prices were RMB 300-200/mt against the most actively traded contracts on the Wuxi electronic trading in the morning, with traded prices between RMB 76,200-76,500/mt. Discounts of Russian nickel were RMB 700-600/mt, with traded prices between RMB 75,500-75,900/mt. Stainless steel increased purchases for Russian nickel due to cost efficiency compared with NPI. Arbitrage traders were also actively. Traded prices inched down to RMB 75,400-76,400/mt in the afternoon. Jinchuan Group lowered prices by RMB 300/mt to RMB 76,500/mt.

SMM surveyed 30 market participants to find that 11 are neutral toward nickel prices this week, 19 are bearish, and no one is optimistic.

37% see LME nickel prices consolidate between USD 10,050-10,350/mt. Nickel ore inventories at ports began to fall while NPI output and trading inventories shrank noticeably. Meanwhile, stainless steel output is stable, leaving demand for nickel steady. Nickel ore prices have little room to fall due to the monsoon season in the Philippines, so prices of NPI (Ni content) remain above LME nickel, lending support to nickel prices. However, LME nickel prices are expected to be resistant to increases due to sluggish commodity market. SHFE 1601 nickel contract prices will hover between RMB 76,500-77,500/mt.

63% expect LME nickel prices to fall to USD 9,900-10,050/mt this week, citing unstable economy in China and ample nickel supply. New Caledonia will export nickel ore, which will intensify oversupply. SHFE 1601 nickel contract prices will hover between RMB 75,500-76,500/mt.