Nickel Prices to Fall on Weaker Consumption

SHANGHAI, Aug 24 (SMM) – Nickel prices are expected to dip. On the fundamental front, supply of NPI and nickel ore will remain tight. However, recent continued declines in stainless steel prices would prompt NPI plants to lower prices, which will subsequently lower stainless steel costs. Demand from stainless steel mills remained strong as the current production schedules at mills stood at a record high. But demand weakened in July compared to June as power restrictions in Guangxi resulted in lower production.

For new energy, demand is likely to weaken in August from July. Import profits of nickel briquette remained high. Continued increase in imports of nickel briquette has grown supply pressure, keeping spot premiums at low levels. The current operating rates at downstream producers stood at high levels, but production schedules for September at automakers decreased amid chip shortages.

Expectations of tighter liquidity and weaker economy have weakened risk appetite.

As such, nickel prices are expected to fall. SHFE nickel prices are expected to stand at 135,000-144,000 yuan/mt this week and LME nickel at $18,000-19,000/mt.