Despite of Weak Demand, SHFE Nickel Once Rose 8.82% amid the Low Inventory

SHANGHAI, Aug 1 (SMM) - SHFE nickel once rose by 8.82% but the increase narrowed to 7.49% as of the closing in noon.

In the spot market today, SMM1# refined nickel average spot price fell by 5.25% to 192,350 yuan/mt.

Jinchuan nickel was quoted at 12,000-13,000 yuan/mt, and the average price was 12,500 yuan/mt, up 6,250 yuan/mt from the previous trading day. NORNICKEL nickel premiums were quoted at 11,500-12,000 yuan/mt, with an average of 11,750 yuan/mt, up 7,600 yuan/mt from the previous trading day yuan/mt. The spot prices rose today mainly because the futures prices increased, while the premiums further declined.

According to SMM, on the supply side, the spot premiums of pure nickel continued to fell last week and the SHFE/LME price ratio of overseas pure nickel expanded. However, due to the weak demand, the volume of customs clearance was lower than expected. In terms of NPI, the increasing supply of Indonesian NPI continued to squeeze the domestic market. At the same time, the prices of ferronickel were relatively low due to the sufficient supply and the cargo backlog. Under the pressure of cost competition, domestic NPI plants tended to hold the prices firm to avoid losses.

On the demand side, the steel mills chose to reduce the production due to the losses. Therefore, both supply and demand were weak. In terms of alloys, although spot prices were high, demand decreased.

To sum up, although the current demand has decreased slightly due to the high nickel prices, the low inventory may give some support to the nickel prices.