SHFE Nickel Price Drop this Week amid Shrinking Demand for Pure Nickel

SHANGHAI, Jan 20 (SMM) - SHFE nickel prices dropped this week. On the morning of January 17, China's National Bureau of Statistics announced that the annual GDP growth rate for 2022 was 3%, which suggested that the overall Chinese economy is improving and the GDP growth rate has reached a normal level. However, the news cast little positive impact on nickel prices. It is necessary to pay attention to the annual rate of the US December core PCE price index (to be released at 21:30 on January 27). Considering that the US Fed will raise interest rates for the first time in 2023 in early February, the core PCE price index is a key indicator for measuring the US private consumer inflation. If the annual rate of core PCE increases by more than 2%, the Fed will tighten the monetary policy, which is bullish for the US dollar while bearish for commodity prices. SHFE nickel prices remained low in morning trade of January 19. The upstream companies were less willing to ship or offer quotes. The NPI plants held low in-plant inventories of finished products. In terms of MHP, the nickel-cobalt smelter invested by BASF and Eramet is scheduled to be put into operation in early 2026, with an annual MHP capacity of 67,000 mt. On the demand side, according to SMM research, market players across the stainless steel industry chain are already on the Chinese New Year (CNY) holiday, hence the market changed little. Demand from the alloy sector was slack as the alloy producers finished the raw material restocking last week. To sum up, the supply and demand for pure nickel both remained weak this week. SMM believes that nickel prices will drop to some extent after the CNY holiday. It is expected that the spot transactions will pick up after the Chinese New Year, supporting the nickel prices.