Nickel prices to fluctuate in wide range, stainless steel contract prices to have limited downside room

SHANGHAI, Jul 6 (SMM) — The Fed has suggested that it will decide the policy direction based on economic recovery. In this scenario, investors bet on the Dollar rising due to upbeat non-farm payrolls last week. This drove nickel prices to fall and seek support from the 20-day moving average.

Non-farm employment issued last Friday was upbeat, while the unemployment rate was disappointing, triggering uncertainty over economic recovery. Nickel prices rallied to around 136,000 yuan/mt in the night trading. SMM believes that nickel prices will lack ability to rise amid expectations over international macro policy adjustment and enhanced domestic commodity regulation, despite positive fundamentals.

Nickel prices are expected to fluctuate widely this week, with LME nickel prices between $17,900-18,700/mt. SHFE nickel prices should fluctuate between 133,000-139,000 yuan/mt.

Stainless steel contract prices fluctuated at a high level around 16,700 yuan/mt early last week. After reaching a record high of 16,990 yuan/mt in the middle of the week, prices began to fall and dropped for two consecutive days by nearly 700 yuan/mt. As of Friday, prices closed at 16,330 yuan/mt, a weekly decline of 2.51%. Bulls reducing positions drove the price decline. Bulls took profits after prices hit a record high, and risk aversion amid declines in metals prices also lowered stainless steel prices. 

However, the current stainless steel spot prices stand at high levels on the back of tight supply. Demand has weakened recently, but inventory has not accumulated.

As such, prices should move rangebound in the short term. Prices of SHFE SS2108 contract are expected to fluctuate between 16,000-16,800 yuan/mt this week.