Nickel Prices are Unlikely to Fall Significantly in the Near Future

SHANGHAI, Sep 26 (SMM) - At 2: 00 a.m. on September 22 Beijing time, the US Fed announced an interest rate hike by 75 basis points, raising the range of the federal funds rate to 3.00%-3.25%, which was in line with market expectations. It is worth noting that according to statistics, the market's expected probability of a 75 basis points rate hike was 82%, while that of a 100 basis points rate hike was only 18%. Therefore, SMM expects that the rate hike will have a limited impact on the nonferrous metal market. Besides, precious metal prices may experience a short-term rebound with the support of the traditional peak season of September and October and the possible slowdown in the future rate hikes. The price trends of nonferrous metals should also be viewed in combination with the fundamentals of various varieties. Last week, the nickel industry was still in the September peak season, and the improvement in demand from stainless steel and new energy markets boosted the market. The demand for pure nickel from the alloy sector grew as well. In addition, the domestic and overseas nickel inventory were both low. Therefore, the nickel prices gained support from the above-mentioned factors. In 2022, the primary nickel supply was in surplus, most of which, however, was found in NPI. The nickel sulphate supply continued to tighten due to the less-than-expected raw material processing caused by insufficient salt capacity. Meanwhile, the pure nickel supply also remained tight as the expected imports declined. SMM believes that nickel prices are unlikely to fall significantly in the near future, and the market shall wait and see the follow-up demand support. SHFE nickel prices are expected to move between 181,000-201,000 yuan/mt. At present, the LME nickel prices have not yet returned to the fundamentals, and the prices may fluctuate. When the prices return to normal, SMM will resume the price forecast of LME nickel.