Spot Nickel Trading Picks up as the Prices Decline

SHANGHAI, Feb 20 (SMM) - Multiple macro data were released one after another last week. On February 14, the US Department of Labor announced that the seasonally adjusted CPI annual rate at the end of January was 6.4%, exceeding market expectations. On the evening of February 15, the US Department of Commerce announced that the monthly rate of retail sales in January was 3%, far exceeding the forecast value of 1.8%, and higher than the previous reading of -1.1%, which also indicated that the economic status and prospects of the US are relatively optimistic. On February 16, related department announced that the annual rate of PPI in January was 6%, which was higher than the forecast reading. Both PPI and CPI surpassed market expectations, which also shows that the current US inflation is still high. On the evening of February 16, the US Fed officials delivered hawkish remarks, and the probability of the Fed raising interest rates by 50 basis points at the February meeting rose sharply. On the fundamentals, the Chinese pure nickel supply is expected to add nearly 3.05% MoM in February. The imports of nickel plates gained profits in the past two weeks. Some nickel briquettes and nickel plates that stored in the bonded zone warehouses were moved into the domestic market last week. On the demand side, spot pure nickel prices fell last week following the nickel prices, pushing up the spot trading. According to SMM research, some alloy companies purchased pure nickel on dips last week. The mainstream premiums of nickel briquettes were around 3,000-4000 yuan/mt, which were still higher than the nickel sulphate prices. But some stainless steel mills still had demand for nickel briquettes. In the short term, nickel prices gained support from the recovery of downstream demand for pure nickel. In the long run, nickel prices may fall owing to the commissioning of new electrowinning nickel production lines in 2023 and the US Fed's rate hike cycle.