SHANGHAI, Jan 14 (SMM) - SMM expects the nickel prices to rise in January on the back of the strong fundamentals. The current global nickel inventories remain low, and the LME nickel is still in backwardation. The domestic spot market continues to see strong premiums. And the spot premiums are expected to remain high in the short term as the traders lack the interest in importing ahead of CNY holidays, hence the large inflows of imported pure nickel will be absent. The trades of nickel sulphate remain hectic on the back of pre-CNY stockpiling, bolstering the prices of nickel sulphate. In addition, few domestic nickel sulphate smelters will cut the output in January and the demand for pure nickel will increase.

For stainless steel, the mills will cut the output in the second half of January as the CNY approaches. But the recent demand for nickel will be stable. On the other hand, stainless steel mills and nickel sulphate smelters will be closed in Q1 due to CNY holidays, which will weaken the nickel demand. The nickel inventory is likely to grow in the short term, depressing the market sentiment. But the post-CNY holiday production resumptions and the peak season for stainless steel will recover the overall output rapidly, boosting the demand for nickel. The demand from the new energy sector will maintain high growth even as lithium iron phosphate battery wrests the market shares of NMC battery. As such, SMM recommends that the buyers purchase cargoes if the nickel prices fall to low levels in Q1.