SMM Nickel Market Daily Review (2015-6-8)

SHANGHAI, Jun. 9 (SMM) – SMM #1 nickel prices were between RMB 96,500-99,700/mt. Jinchuan Group adjusted their quotes slightly on rising nickel futures prices in the morning, with premiums of Jinchuan nickel against the most actively traded nickel contracts on the Wuxi electronic trading remaining at RMB 2,500/mt. A few traders sold at lower prices, but downstream buying interest was weak, leaving trading muted and traded prices between RMB 96,500-99,400/mt. SHFE nickel prices returned above RMB 100,000/mt in the afternoon, but premiums of Jinchuan nickel against the most actively traded nickel contracts on the Wuxi electronic trading fell to RMB 2,000/mt. Supply increased as Jinchuan Group ramped up supply, but downstream demand softened, muting trading and with traded prices between RMB 96,800-99,300/mt. Jinchuan Group hiked prices by RMB 1,000/mt to RMB 100,000/mt.

SMM surveyed 30 market participants early this week to find that 5 are bullish toward nickel prices trends this week, 16 are neutral and 9 are bearish.

The 17% optimistic ones believe LME nickel prices will rise to USD 13,200-13,500/mt this week. China’s official PMI in May was 50.2, compared to the 50.3 expected and 50.1 in April. HSBC’s manufacturing PMI in May was 49.2, in line with market expectations, and slightly higher than the flash 49.1. This suggests Chinese economy appeared to have bottomed. NPI producers have been holding back goods recently, lending support to nickel prices. SHFE 1509 nickel contract prices are expected to rise to RMB 102,500/mt but meet resistance at the 20-day moving average.

53% see LME nickel prices fluctuating between USD 12,900-13,200/mt. The number of jobs added in US non-farm sector hit a five-month high in May, with salary also rising. This left US companies optimistic toward economic outlook and boosting the US dollar index. But any effect on base metals should be limited. Growing NPI output and nickel oversupply will constrain nickel price gains, despite the fact that nickel ore supply decreased recently and NPI producers held back goods. One trader from Shanghai reported sluggish downstream purchases, which were made mostly at the low-end of the price range. SHFE nickel prices are expected to fluctuate between RMB 98,000-100,000/mt.

30% see LME nickel prices falling to USD 12,600-12,900/mt. Despite of stabilizing Chinese economy, HSBC’s manufacturing PMI for China in May was 49.2, meaning SMEs are shrinking. US economy is relatively upbeat, boosting the US dollar index and weighing on base metals prices. Ongoing Greek crisis will affect eurozone economy. Anti-dumping investigations on stainless steel from China by US and India will take a toll on China’s stainless steel sector, in turn biting into nickel demand. SHFE nickel prices will also drop to RMB 96,000-98,000/mt.