Where Will SHFE Nickel Head after Ending Four-Day Winning Streak?

SHANGHAI, Jun 2 (SMM) - SHFE nickel closed down 2.15% as of yesterday’s noon, ending four-day winning streak. LME nickel closed down 2.14% as of CST 17:30 yesterday.

Spot market

The average spot price of SMM1# refined nickel was 218,900 yuan/mt yesterday, down 2.06% from the previous day. Premiums of Jinchuan nickel went down amid a slight recovery of supply, while premiums of Norilsk nickel fell sharply due to increasing supply in the domestic spot market. Despite the inflows of Norilsk nickel, the current supply of pure nickel remains tight.

Weakness of stainless steel end market and ample supply of NPI weighed on NPI prices. However, as the cost of NPI is still high, NPI prices found certain support.

Given the poor profits and weak demand, stainless steel mills lack incentive to increase production. Spot nickel prices fell back, but remained at a high level, suppressing purchases by alloy plants.   To sum up, weak demand will prevent nickel prices from going up, even as the inventory continues to fall.