How Much Further Can Nickel Ore Fall? SMM Reports

Published: May 22, 2017 10:46

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Last week, CIF prices for Ni 1.5% nickel ore extended declines, and fell below the low-end traded prices seen two weeks ago. will nickel ore prices keep falling?

SHANGHAI, May 22 (SMM) – Last week, CIF prices for Ni 1.5% nickel ore extended declines, and fell below the low-end traded prices seen two weeks ago.

Nickel ore prices have been falling since the beginning of 2017 according to SMM data, and will nickel ore prices keep falling?

China Nickel Ore Inventories Keep Growing, SMM Reports

"Weak demand is expected to continue weighing down nickel ore prices, leaving downward pressure unchanged,” SMM nickel analyst foresees.

Consumption from domestic high-grade NPI producers was weak as continuous declines in the high-grade NPI market incurred big losses. Meanwhile, sea freight charges are down recently, sending down prices for medium and high-grade nickel ore, both for spot and future delivery.

What’s Outlook for Nickel Market after Cut News at Chinese NPI and Stainless Steel Producers? SMM Reports

But to which point?

According to SMM data, FOB prices for Ni 1.5% nickel ore fell for fifth consecutive month, but did not touch a recent-year’s low of $18 per wmt, and mining costs for Philippine Ni 1.5% ore are at around $20 per wmt. But, major nickel ore mines, after environmental crackdowns in 2016, choose to hold prices firm, a reflection of strong intension to support prices. In this sense, nickel ore prices will not fall sharply in the short term unless the sea freight charges stage a big drop. But, oil price rises will support sea freight charges, so nickel ore market will only see mainstream traded prices lower with traded price range narrowing, and will not tumble.

If replenishment demand in China, which usually starts in May and June, does not materialize, nickel ore prices will be weighed down again, and CIF prices for Ni 1.5% ore will likely fall below $30 per wmt.

To sum up, China’s nickel ore market is now a buyer’s market, and if no demand releases, it will be a question of “when” for nickel ore prices to drop.

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nickel prices nickel ore prices china nickel ore inventories

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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