Nickel Prices to Remain Rangebound

SHANGHAI, Dec 21 (SMM) – The asset prices have seen a large pullback amid the expectations of an interest rate hike by the Federal Reserve. However, after the Fed’s most hawkish speech this year, the asset prices have shown a retaliatory rebound. This is likely to be driven by a higher expectation of an inflation in 2022. Although the Fed is tapering its bond purchase, the commodities prices are unlikely to fall sharply in the long term as the credit impulses is normally nearly six 6 months ahead of the commodities prices. The tightening of the monetary policy is likely to grow the asset volatility in the short term. Therefore, after the Fed’s speech, the market will stabilise at least in the short term, and the contradiction between the supply and demand will become a focus of the market.

LME nickel and the domestic pure nickel inventories have continued to hit new lows. The backwardation of LME cash to the three-month nickel contract surged from $47/mt to $115/mt. The premiums of NORNICKEL nickel have also risen rapidly to 1,500-1,600 yuan/mt. The ultra low inventory will continue to underpin the nickel prices this week. The market shall pay attention to the import window. The price spread between NPI and pure nickel has expanded to 20,000 yuan/mt as NPI prices have been on the decline. The demand from nickel sulphate remains bearish.

The nickel prices lack support from the fundamentals.