SHANGHAI, Dec 18 (SMM)－While the announcement of import tax increase for nickel ingots last Friday has boosted market sentiment, SMM believes downstream demand also plays a part in rising nickel prices.
Under the new import tax regime, which starts on January 1 next year, the costs of Russian nickel exports would go up and this would narrow the discount of Russian material against Jinchuan nickel.
This also means that stainless steel mills would purchase more nickel pig iron due to rising costs.
SMM believes the current stainless steel market is rather tight in supply. Coupled with rising costs, prices of series 200 and 300 stainless steel are forecast to be higher this week while the series 400 is set to be stable.
Rising stainless steel prices following lower inventory levels would therefore drive up nickel prices, according to Chen Long, analyst at Dongwu Futures.
The SHFE nickel main contract closed at 93,740 yuan/mt today, up 4.2%.
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