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[SMM Weekly Outlook] this week, Shanghai Nickel fell back and spit out the increase against the 20-day moving average to see if it could go up.
Jul 18,2020 08:57CST
The content below was translated by Tencent automatically for reference.

SMM7 March 17: this week, Shanghai nickel rose first and then suppressed. With the continuous green in the second half of the week, it basically spit out the first half of the week's increase. As of Friday (July 17), the main contract of Shanghai nickel was 2010 yuan / ton, which basically fell back to the closing price of 105400 yuan / ton on Monday.

In terms of this week's major events, the local government decided to enter a 30-day state of emergency after flooding hit six areas in the Luwu region northwest of South Sulaway. The state of emergency runs from July 14 to August 12, 2020. According to SMM research, the flood disaster is located in the south of Sulawesi, far away from the ferronickel production enterprises (the distribution map is shown below), and has not yet affected the normal production of the relevant nickel-iron plants in Indonesia. If the situation continues, it may affect local mine shipments.

In addition, Anglo American released its second-quarter production report, showing a 10% year-on-year increase in nickel production in the second quarter, thanks to improved operational stability and Barro Alto shutdowns scheduled to be completed in the early second quarter of 2019. Current Covid-19 measures to protect workers and communities are not expected to seriously affect production in 2020. In terms of full-year guidance, the production guidance remained unchanged at 42,000 million tons, depending on the extent of further disruptions related to Covid-19.

SMM's point of view:

The trend of Shanghai Nickel showed a trend of rising and falling this week, opening at 106530 yuan / ton at the beginning of the week. after sitting on the 10-day moving average, Shanghai Nickel continued to strengthen and explore under the leadership of bulls. It hit the 110000 mark on Monday night, reaching as high as 110190 US dollars / ton. Subsequently, bulls stopped earnings and reduced their positions, and nickel prices gradually fell to horizontal volatility around 108600 yuan / ton. by Thursday, A shares plummeted 4.5%, dragging down the commodity market, early bulls avoiding risk and leaving, and short sellers suppressed by homeopathy. at one point, Shanghai nickel gave up all its gains in the week and fell to around 105000 yuan / ton on the 20th. On Friday, Shanghai nickel companies rose again after stabilizing, but they were under pressure of 107300 yuan / ton on the 10th average. After the funds left the market, it finally closed at 106360 yuan / ton, a weekly increase of 0.83%. This week, Shanghai nickel rose under the push of funds, and then fell back. As the bad mood gradually digested, next week we will pay attention to whether it can be re-explored after the consolidation of Shanghai nickel's 20-day moving average.

SMM spot View:

The average price of electrolytic nickel in SMM1 this week is 107300 yuan / ton, the average price of Jinchuan nickel is 107710 yuan / ton, and the average price of Russian nickel is 106930 yuan / ton. the average weekly spot price is all higher than that of about 1000 yuan / ton last week, so the spot trading atmosphere in the week is not as good as that of last week. In this cycle, nickel showed a trend of rising and falling, and the spot trading volume only picked up when the nickel price was low on Thursday, and the daily trading volume in the other four days was relatively limited. The 07 contract is delivered this week, but the merchant in the market is still quoted for the 08 contract, and the hedging plate is expected to change one after another next week. Spot price rises, Russian nickel discounts are basically stable, and prices remain at around 2008 yuan / ton for Shanghai Nickel contracts during the week, while Jinchuan Nickel rising Water is relatively lower than last week, with the lowest falling to 200 yuan / ton for Shanghai Nickel 2008 contracts. Jinchuan rising water fell on the one hand due to light consumption, on the other hand, the smelter is also willing to ship goods. It is reported that hundreds of tons of Jinchuan Nickel will still be sent to Shanghai next week. Therefore, it is expected that Jinchuan nickel rising water will remain at a low level. Nickel beans, this week's offer remains at a discount of about 1500 yuan / ton, after the price fell on Thursday, some stainless steel factories have purchased goods. At present, the domestic pure nickel warehouse bases again, if the nickel price remains high next week, the spot discount may be lowered.

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