Nickel prices receive brief support from tight supply in May

SHANGHAI, May 15 (SMM) – Nickel prices received support as capital inflows surged on short supplies in the market as of Tuesday May 15. However, SMM does not expect the uptick in prices to be sustained as stainless steel consumption is likely to cool in June and as optimism from nickel sulphate for the battery industry weakens.

The SHFE nickel 1807 contract climbed up to close at 106,520 yuan/mt on Monday, 2,600 yuan/mt higher from last Friday. 

Inventories of nickel plates in Shanghai stood under 100,000 mt, but about 175,000 mt is due for delivery on Tuesday May 15. Open interest of the SHFE 1807 contract grew over 50,000 lots to 697,000 lots as of Monday May 14, which translated to 350,000 mt of cargoes.

Both domestic and LME nickel inventories declined steadily last week. Stocks of nickel across LME warehouses stood at 311,600 mt on May 11, down 5% from the same period in 2017 to stand at a low in four years.

Prices of stainless steel rebounded as downstream consumption rose in the high season in May. Prices also received some support as major steel mills in south China cut production for maintenance activities, at the start of May.

Environmental inspection teams from Shandong province were heard to have settled in Zibo, Dongying, Tai'an and Linyi cities this month. The impact of this settlement remains unclear. Output of ferronickel in this region accounted for 20% of the market in China, SMM surveyed. 

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