Shanghai nickel fell 3.57% for five consecutive consecutive weekly lines The Indonesian general election during the Spring Festival may affect LME nickel prices
SMM, February 4: Shanghai nickel has continued to decline since January 29, 2023, after hitting a new high of 132,350 yuan/ton, and closed flat on Friday night, falling for five consecutive days, with a weekly decline of 3.57%. London nickel did the same this week, closing down 0.09% on Friday and down 2.05% on a weekly basis.
Spot market The average spot price of SMM 1# electrolytic nickel this week was weak, down 0.04% from the previous day on Friday, and the weekly decline was about 2.87%. Approaching the Spring Festival holiday, the spot market transactions are light.
Fundamentals Supply and demand side:
Indonesia's nickel ore RKAB approval is slow but has increased compared with last week's data, and the short-term nickel ore supply tension has eased to a certain extent. According to SMM research, the domestic electrolytic nickel output in January was 25,300 tons, an increase of 3.27% month-on-month and 54.27% year-on-year, mainly due to the fact that nickel prices in January warmed up compared with December, and most electronickel plants were able to produce profitably. It is estimated that the domestic electrolytic nickel output in February will be 23,600 tons, a decrease of 6.7% from the previous month. The Spring Festival is approaching, and some enterprises are already in the stage of suspension of production. In addition, some companies also have maintenance plans during February. In addition, the Indonesian general election during the Spring Festival may affect LME nickel prices, and if LME nickel prices fall due to macro news, it may lead to losses for electronickel factories and affect domestic electronickel exports.
Inventory:
Inventory at home and abroad is still accumulating this week, and domestic inventory exceeds 20,000; Overseas inventories exceeded 70,000 tons, an increase of 1,986 tons week-on-week. This week, SMM's pure nickel inventory in six places accumulated 935 tons compared with last week, and the nickel bean inventory accumulated 100 tons during the week. At the beginning of the week, nickel prices once rose, and the downstream procurement sentiment was under pressure during the week, the spot trading atmosphere was relatively weak, and the inventory increased slightly.
On the demand side:
the frequency of transactions between upstream and downstream enterprises near the Spring Festival holiday fell slightly compared with mid-January, and it is worth noting that some upstream nickel factories reported that some of this week's orders were booked after the year.The Spring Festival holiday is approaching, the downstream is gradually entering the holiday state, the pace of procurement has slowed down, and the activity of the overall spot market has decreased slightly. In addition, according to SMM research, downstream post-holiday procurement is expected to occur in late February.
SMM Outlook：
On the macro front, after the release of the non-farm payrolls data, the swap market showed a decline in bets on the Federal Reserve's interest rate cut in March, and the dollar index rose sharply, rising 0.48% for the week, bearish for commodity prices. On the whole, the Spring Festival holiday is approaching, the fundamentals of the nickel market are weak in supply and demand, the inventory is increasing, and the US dollar is negative, the nickel price is weak this week, and SMM expects the nickel price to run weakly before the holiday. During the Spring Festival, pay attention to the impact of the Indonesian general election on LME nickel prices.
Please do not hesitate to contact me at jeantang@smm.cn or 86-19946295759 if you have any question or inquiry.
