SMM: Will Nickel Prices Maintain its Gains Achieved This Week?

SHANGHAI, Dec 23 (SMM) – SHFE nickel prices have been fluctuating in a wide range in the past two months as the market saw both bullish and bearish factors amid low inventory and weak demand. Therefore, though SHFE nickel surged in the past few days, it failed to break the rangebound based on the monthly chart.

On the supply side, domestic output of nickel as raw materials was little changed in December, and is likely to maintain the current stability; while the imports will depend on internal demand. In other words, the major influencing factor came from the downstream demand.

Firstly, the stainless steel sector was sluggish as a whole in December, creating pressures to the raw material side. The NPI prices moved all the way down to 1,250 yuan/mt in Ni content, and the support of nickel prices moved downwards. On the other hand, the new energy also failed to offer strong support in December as the precursor companies were destocking, resulting in less demand for raw materials. As such, the nickel sulphate prices dropped from a low level to 34,000 yuan/mt. In general, the marginally declining demand has been unable to support the nickel prices.

Furthermore, the inventory seems to be a long-lasting influencing factor, and the current low inventory is likely to extend into the near future, which has been the leading cause of the recent price moves of SHFE nickel. And the macro front also played a role in shaping the chart.

However, from the prospect of the fundamentals alone, the nickel demand is unlikely to pick up around the year-end, hence the SHFE nickel prices will stay in the current range.