Continued Low Demostic and Overseas Inventories Supported the Nickel Prices

SHANGHAI, Aug 2 (SMM) - Most nonferrous metals fell due to macro factors. Overnight, SHFE Nickel started a downward trajectory and continued to trend lower today, once falling by 3.27%. As of noon, the decline narrowed to 2.29%.

In the spot market, the average spot price of SMM1# refined nickel dropped to 186,300 yuan/mt today, down 3.15% from yesterday. The prices of nickel briquette stood at 183,700-184,400 yuan/mt, 5,050 yuan/mt lower than that of the previous trading day. The prices dropped along with slightly falling futures prices, and nickel briquette was traded at premiums over nickel sulphate. The transactions of nickel briquette were extremely scarce.

According to SMM analysis, on the supply side, SHFE nickel futures prices remained high, and the profit of spot pure nickel imports expanded, but the customs clearance fell short of expectations. The domestic mainstream refined nickel manufacturers currently sustain normal production desipte hot summer. The arrivals of Indonesian NPI in China increased significantly, and the overall supply of NPI at domestic and overseas markets is far higher than the demand, which is bearish for ferrochrome prices. On the demand side,  SMM research suggests that the spot prices have stopped falling and stabilised. Although the market prices soared over the weekend, the transactions were still flat. At the same time, the demand for pure nickel in the alloy sector weakened due to the continuous rise in the absolute spot price of pure nickel. To sum up, the demand for pure nickel was weak as a whole, but the continued low domestic and overseas inventories may give some support to the nickel prices.