Nickel Prices Pull Back after Surging High in the First Week post CNY Holiday

SHANGHAI, Feb 2 (SMM) - During the first week after the Chinese New Year (CNY) holiday, nickel prices soared on expectations for improved consumption and the Philippines' potential ban on nickel ore exports. The high prices discouraged the downstream buyers from purchasing, and the spot trades during the morning session today were thin.

However, it should be pointed out that it will be hard for the above-mentioned ban to materialise due to multiple factors such as the efforts of the Philippine government, the high power costs and the long span of rainy season that hampers the mining and transportation of nickel ore.

As of this afternoon, SHFE nickel prices pulled back against the weak fundamentals and after the market digested the news of the ban. According to SMM survey, inquiries about the futures prices improved significantly with the decline in nickel prices.

In terms of the production resumption of downstream sectors, the operating rates of electroplating industry were still lower than expected, primarily because that the narrowed profits resulting from high nickel prices took a toll on the orders. 

SMM survey shows that most nickel electroplating enterprises were closed during the Chinese New Year (CNY) holiday, and will resume the operation after the Lantern Festival (February 5).

The alloy producers maintained normal production during the CNY holiday and had stockpiled sufficient raw materials when nickel prices fell in early January. Although some already saw inventories falling to a low level after the holiday, they still held back from purchasing pure nickel on rising futures prices.

The orders for NiMH battery were sluggish under the influence of a weak ternary battery industry, so the production resumption of related enterprises was slow. It is estimated that the NiMH battery output in February will be slightly higher than those in January.

In terms of nickel wire and nickel mesh, the manufacturers maintained normal production and restocking during the CNY holiday. The orders are likely to improve with stronger policy support for the real estate sector in February.