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[SMM monthly Outlook] Nickel market fundamentals perform well and short-term prices are expected to fluctuate strongly.
Sep 1,2020 17:13CST
The content below was translated by Tencent automatically for reference.

SMM9 March 1: looking back throughout August, Shanghai Nickel stood at the 110000 mark at the beginning of the month, and then only showed a callback correction in the middle of the month when the domestic social finance data were lower than expected, and the rest of the time maintained a good multi-trend momentum. As of August 31, the closing price of Shanghai Nickel 2011 was 121240 yuan / ton, up 12220 yuan / ton, or 11.21%, compared with the closing price of 109020 yuan / ton on the first trading day of August. In September, Shanghai Nickel reached a new high today. By the end of the day, the main contract 2011 closed at 123080 yuan / ton, an increase of 1.84%.

On the news side, the recent news about the strike and flood at smelters in Indonesia has triggered a heated discussion in the market. although it has little impact on the supply side, the market sentiment has boosted the bulls and increased their positions rapidly. According to SMM research, the main inducement of the strike and labor dispute at the Castle Peak IMIP Park in Indonesia was the dismissal of some Indonesian employees in the early stage of the park, which led to an increase in the workload of the remaining workers. However, this incident has not yet had an impact on production. Flood, according to SMM understanding, the flood temporarily affected the operation of the smelter, has gradually recovered, the current smelter operation is normal. Although the impact of the early news on the fundamentals of the nickel market is limited, there is a significant boost to the market's concern about supply.

From a fundamental point of view, nickel mines do support the rise in nickel prices. According to data released on the website of the General Administration of Customs, China's total imports of nickel mines totaled 4.9032 million tons in July 2020, an increase of 41.9 per cent from the previous month and a year-on-year decline of 9.56 per cent. Of this total, the Philippines imported 4.3946 million tons of nickel ore, an increase of 42.9% over the previous month and 18.1% higher than the same period last year. There are still 119800 tons of nickel mines declared in Indonesia. Imports of nickel ore increased sharply as expected in July and will continue to be high in August and September. However, the ironworks are currently actively preparing goods for the rainy season, and the nickel ore market is still in short supply.

Stainless steel, today's Castle Peak opening, 304 cold and hot rolling are up 300 yuan / ton, for the spot, after the price increase is basically the same as the current spot quotation, some businesses reflect that the price increase is within expectations, and not as high as expected, so spot prices are mainly stable. At present, the performance of the stainless steel market is better than expected. The high production rate of 300 series stainless steel and the continuous reduction of social inventory are the main factors contributing to the increase in the price of high nickel pig iron.

The only positive factor in the fundamentals is the spot nickel. As of the latest survey today, after the nickel spot entered September, although the activity of the inquiry offer is good, the hanging order and transaction situation is still not good, and the transaction volume remains low. Although Jinchuan nickel rose higher, the current quotation for 10 contracts rose about 700-800 yuan / ton, mainly because manufacturers' recent overhaul shipments were limited. However, under the circumstances that traders are actively replenishing and restocking, and consumption is expected to pick up in September, there is a price increase in the pattern of weak supply and demand. As for nickel beans, it is reported that the long order of nickel beans has continued to arrive recently, but most of them have been pre-sold in advance. At present, some traders have replenished the goods, but they are not in a hurry to ship, so the discount has not been lowered as scheduled. On the whole, the spot supply of pure nickel still needs to be reduced for a long time relative to the current consumption.

SMM believes that at present, the short-term fundamentals of nickel are good, and in the long run, it is also better than expected; in the third quarter, 300 series stainless steel high discharge capacity high nickel pig iron changed from leftover to deficient, and in the fourth quarter or tight balance, the surplus was less than originally expected, so some nickel market fundamentals of nickel pig iron performed well. In terms of pure nickel, although consumption is not good, the decrease in domestic spot nickel imports adjusts the market to a certain extent, so that the domestic social inventory is basically balanced and the market performance is relatively stable. SMM believes that the price is too strong and volatile in the short term. It is expected that this week Shanghai nickel will be 118000-125000 yuan / ton and Lunni will be 15000-15800 US dollars / ton. However, the role of the news in the face of fundamentals is limited, and there is a short-term technical pullback in the later stage, but after consolidating the support below, it still maintains a multi-momentum.

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