Nickel Prices to Continue to Strengthen, Prices of Stainless Steel Moved Rangebound

SHANGHAI, Aug 17 (SMM) - Market expectations over a tighter monetary policy in the US increased amid upbeat economic data, bolstering the US dollar.

Commodities prices have fluctuated in a wide range amid significant swings in market sentiment. The volatility in nickel prices is expected to intensify.

Nickel prices have outperformed stainless steel prices recently. The market believes that expectations of limited output cuts and higher costs amid tight supply of nickel ore and NPI will prevent stainless steel prices from falling sharply.

Continued arriving shipments have grown supply of nickel briquette, lowering spot premiums. But planned shipments arrivals this week stand at low levels. Stainless steel mills are likely to purchase nickel briquette amid supply shortages of nickel plate.

Demand from nickel sulphate producers was stable. As such, inventories of nickel briquettes are unlikely to accumulate further. Fundamentals remain promising. Social inventory of nickel plates and SHFE warrants continued to decrease, and the current nickel warrants stand at a record low. Nickel prices are expected to strengthen, with SHFE nickel prices between 140,000-149,000 yuan/mt this week. LME nickel prices will fluctuate between $18,900-19,800/mt.

Tsingshan lowered prices of #304 cold-rolled products by 1,100-1,300 yuan/mt early last week, dragging down spot prices. The SHFE SS2109 contract fell to a low of 18,050 yuan/mt as short positions increased, with a maximum drop of around 1,000 yuan/mt. Prices then moved around 18,300 yuan/mt. As of Friday daytime, the contract closed at 18,240 yuan/mt, a weekly decline of 775 yuan/mt or 4.08%.

Bulls and bears on stainless steel are currently in a stalemate. Weak demand has pressured prices. However, lower output of 300 series stainless steel and the high cost will support prices. Stainless steel prices are expected to fluctuate rangebound between 17,800-19,400 yuan/mt this week.