Shanghai nickel prices pull back from record highs

SHANGHAI, Sep 16 (SMM) – Shanghai nickel prices on Monday September 16 relinquished gains from the previous eight sessions as market bullishness eased from top miner Indonesia’s advanced nickel ore export ban. 

The most-liquid November nickel contract on the Shanghai Futures Exchange ended down 4.23% on Monday at 137,500 yuan/mt, after fell to as low as 137,000 yuan/mt. 

SMM expects fundamentals unlikely to sustain a price rally in nickel prices, which will retreat and hover between 133,500-134,000 yuan/mt in the short term. Movement in long positions should be monitored. 

Decent margins boosted production of stainless steel, a major downstream sector of nickel, since August, but an absence of a significant pickup in demand drove stockpiles of stainless steel to all-time highs. This also poses potential downward pressure on nickel prices. 

SMM data showed that China’s output of nickel pig iron (NPI) rose 4.82% from a month ago to a record high of 53,200 mt in Ni content in August, as high-profit margins prompted smelters to ramp up operations.

As smelters in major producing hubs such as Shandong and Inner Mongolia stepped up production on high profits, output of high-grade NPI grew 5.62% from July to 46,000 mt in Ni content last month. Output of low-grade materials, meanwhile, held stable at 7,200 mt in Ni content.

NPI production is expected to shrink 0.18% month on month to 53,100 mt in September, with output of high-grade materials declining 0.56% to 45,700 mt. Production of low-grade NPI will likely rise 2.22% to 73,700 mt, as some smelters in the north recover. Overall NPI production will rise 28.38% from a year ago in September.

Separately, data from London Metals Exchange showed that nickel inventories across LME-approved warehouses recorded the biggest gain since mid-June, at 6.6%, and stood at 166,680 mt as of Friday September 13.