Nickel Prices Are Expected to Be Encompassed by Bullish Sentiment

SHANGHAI, Jan 25 (SMM) - The SHFE nickel continued to rise strongly last week, as the LME and SHFE inventories both dropped to extremely low levels and are expected to keep falling. Besides, the domestic social inventory and bonded inventory of pure nickel fell further, and the premiums were rising. The tight spot supply at home and abroad boosted the SHFE nickel prices. The nickel prices may pull back if the spot supply eases in the short term, but the overall supply will remain short in the long run, hence the bullish sentiments will be stronger in both the futures and spot market. SHFE nickel prices are expected to fluctuate between 170,000-185,000 yuan/mt this week, and LME nickel prices are expected to move between $23,500-25,000/mt.

The stainless steel spot market gradually entered a holiday state last week, but the SHFE SS contract surged to 19,000 yuan/mt on the rising nickel prices. The market was quiet approaching the holiday. On the supply side, the traders did not have enough stocks, and the social inventory stood low as well. The stainless steel output declined amid maintenance in January. The inventory increase during the CNY holiday will not exceed the expectations. On the demand side, some users had low inventories due to the wide fluctuations of stainless steel prices approaching the CNY, and they are expected to restock raw materials after the CNY holiday. The prices are expected rise as the nickel prices are soaring, and the NPI prices are likely to rise as well. The nickel prices hit record highs last week, which provided upward momentum for the stainless steel prices. However, the withdrawal of funds may cause the pulling back of the prices this week before the Chinese New Year (CNY). The SHFE SS contract is expected to trade between 17,500-19,200 yuan/mt this week.