Nickel Prices Have Strong Resistance to Declines

SHANGHAI, Nov 8 (SMM) – The sluggish real estate data has triggered market expectations of weak consumption. The prices of non-ferrous and ferrous metals edged lower. The nickel prices dipped to below 140,000 yuan/mt, but the support is expected to be strong as well at this level. On the fundamental front, although the premiums of battery-grade nickel sulphate over refined nickel have rallied to more than 20,000 yuan/mt, it is still mainly driven by the rapid decline in the nickel prices.

At present, nickel sulphate sellers have raised their prices due to high costs. In the future, the market shall pay attention to whether the downstream can accept such price level. At present, the companies that produce nickel sulphate with dissolved nickel briquette did not cut their output, which will maintain strong demand for nickel. The cost of spot NPI stands at 150,000 yuan/mt, and the premium over pure nickel is 8,000 yuan/mt. This drove the steel mills to purchase pure nickel in large volumes. But the lower prices of auxiliary materials are likely to lead to drops in NPI prices in the near term. The nickel prices are believed to have been underestimated.

If the future electricity prices and coal prices fall to the national guide prices, the cost support of nickel will collapse. This is why the investors are bearish over the nickel prices. Whether the nickel prices will rebound still depends on the improvement in market sentiment this week. The confidence of the longs has been significantly undermined as the recent bargain-hunting all resulted in losses, and the investors would not enter the market only if the nickel prices rebounded for some consecutive days. SHFE nickel prices are expected to move between 138,000-145,000 yuan/mt this week. LME nickel prices will fluctuate between $18,900-19,500/mt.