SHANGHAI, Jul 1 (SMM) – The rally of SHFE nickel is full of arduousness. After a brief rebound last week, SHFE was back on the downward trajectory again today, with a fall of 6.62% as of 11:39 am Beijing time.
Spot market
The average price of SMM #1 nickel dropped 3.41% on July 1 from yesterday to 182,450 yuan/mt after rising for two consecutive days.
The premiums of Jinchuan nickel were offered at 8,600-9,500 yuan/mt with an average of 9,050 yuan/mt, down 450 yuan/mt from a day ago. NORNICKEL nickel was sold in premiums of 5,500 yuan/mt, flat from a day ago. Spot premiums fell today as traders actively sold off at the beginning of the July for the shift of positions in the futures market. However, market demand was muted today.
On the supply side, SHFE/LME price ratio fell amid dropping SHFE nickel and high premiums in the bonded zone, and the imports fell to the loss-making zone. In addition, declining NPI prices hurt the selling interest of goods holders, and high cost and low prices have resulted in losses suffered by NPI plants. But they have to cope with this fact amid sluggish demand.
On the demand side, as the pandemic situation has improved, the consumption side has picked up. But the recovery is slow recently, and the high inventory calls for urgent digestion. In the alloy sector, the demand was still poor due to factors such as procurement cycle and rising spot prices of pure nickel.
To sum up, SMM believes that nickel prices will drop again due to macro factors and sluggish demand.
