Spot Nickel Trading to Pick up Post-Holiday

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. On the fundamentals, the import losses stood at 3,000-5,000 yuan/mt this week. The volume of customs clearance was limited despite the import profits earlier since the demand remained poor this week. As for the domestic pure nickel, it is expected that the established refined nickel enterprises will maintain normal production in January, and Tsingshan Group will release a small amount of electrodeposited nickel into the market in the month. On the demand side, the spot transactions decreased palpably this week, which forced many cargo holders to suspend their transactions. Most buyers stopped purchasing to mitigate risks, and downstream companies had already completed their pre-holiday restocking last week. It is expected that the spot transactions may improve after the CNY holiday. Domestic newly-built refined nickel enterprises were active in production. But the news of production ramp-up failed to ease the market’s concerns about supply, and the supply of deliverable refined nickel remained tight. According to SMM research, orders received by stainless steel traders were abundant, and are scheduled to be delivered in February. Besides, China introduced supporting real-estate policies. SMM believes that the output of 300-series stainless steel will grow sharply in February. Orders received by alloy companies can maintain their production during the CNY holiday, and the alloy producers will restock some raw materials post the holiday. In February 2023, it is expected that the terminal demand will improve, limiting the downward space of nickel prices.