Spot Nickel Supply to be Relatively Sufficient this Week

SHANGHAI, Feb 13 (SMM)－Nickel prices dropped first and then rose last week amid the frequently released macro factors and news. On February 3, the US Department of Labor announced that the seasonally adjusted non-farm employment was 517,000, which far exceeded the expectation of 185,000. This means that the current US economy is more resilient and the Fed will increase the rate hikes further in the future, which was bearish for commodity prices. On the news front, on February 9, nickel futures began to grow due to the incident of Trafigura nickel trading. SMM believes that the scam may confirm that the current nickel inventory is lower than the actual value, which intensified the market’s concerns about the tight supply of nickel and has a bullish effect on the futures prices. In terms of fundamentals, the SHFE/LME nickel price ratio rose, and spot imports began to gain profits. Some traders who locked in the price ratio are expected to clear customs this week. China produced 16,400 mt of refined nickel in January, down 1.5% on the month but up 37.24% on the year. The sharp increase was contributed by Jinchuan’s production ramp-up and the commissioning of new electrodeposited nickel production lines in China. On the demand side, when the nickel prices fell amid the macro sentiment early last week, downstream companies restocked some raw materials. According to SMM research, in-plant inventories of raw materials stored by alloy companies were consumed and reached a historical low at the beginning of the week. In addition, nickel prices declined. These factors boosted spot trading. However, affected by the later news factors, the prices of nickel rebounded, and the transactions became slack. In general, downstream enterprises are generally afraid of high nickel prices at present. Besides, spot pure nickel in the bonded zone warehouses will flow into the domestic spot market this week. SMM believes that the spot supply will be relatively sufficient this week.