Nickel Prices are Expected to Fall with Weak Fundamentals

SHANGHAI, Feb 6 (SMM) - Nickel prices continued to grow last week thanks to boosted sentiment following the production resumption of companies post Chinese New Year (CNY) holiday. On February 2, the US Fed announced that it raised the interest rate by 25 basis points to 4.50%-4.75%, which was in line with market expectations. On the supply side, the upstream companies were more willing to ship as SHFE nickel price remained high. The spot transactions once picked up slightly owing to the low spot prices. In terms of NPI, according to SMM research, a steel mill in south China once bought high-grade NPI at 1,385 yuan/mtu (tax included, delivery to factory), and the price of NPI purchased by a mill in east China was 1,390 yuan/mtu (tax included, delivery to factory) in the amount of thousands of metric tonne. On the demand side, recent market transactions have remained weak, and it will take some time for downstream demand to be released. Spot prices of stainless steel remained low under inventory pressure. The #316L stainless steel market witnessed no transactions, and some traders suspended making quotations. The guide price of stainless steel offered by steel mills continued to rise amid the rising raw material prices, and there were few transactions in the market. Alloy enterprises were reluctant to purchase as the nickel prices stood high. To sum up, the overall fundamentals of pure nickel were weak, reducing the support for nickel price.