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Marketoptimism to prop up nickel in short term

SHANGHAI,Jul 19 (SMM) – Nickel prices are expected to remain firm in the short term, aslow inventories and tight supplies of deliverable goods keep speculative longsdominant, and as the industrial chain from raw materials to stainlesssteel follow suit.
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Themost active October nickel contract on the Shanghai Futures Exchange remainedrobust on Friday morning, hitting a 13-month high of 119,240 yuan/mt. Thiskept it on the course for an eight-day winning streak. Three-month nickel onthe London Metal Exchange on Thursday also extended its rally, breaking the$15,000/mt level and rising for a 12th straight day to a year-high.
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Nickelinventories across LME warehouses almost halved from May 2018 to stand at148,200 mt as of July 18, data from the bourse showed.

Thisstrong showing grew concerns among some investors that the rally hadentered unstable territory. SMM believes that the optimism across theindustrial chain, spurred by the nickel rally, will shore up the market inthe short run.

Arecent hike in purchasing prices of ferronickel and procurement volumes of spot nickel by major Chinese stainless steel mills grew momentum in nickel prices.

Prices of nickel ore also climbed, boosted by higher sea freight and nickel prices. SMM learned that high-grade nickel ore with Ni 1.8% traded at $49-50.5/wmt on a cif basis this week, up some $0.5/wmt from last week.

Stainlesssteel producers and traders continued to raise their quotes, with TaiyuanSteel having increased its offers for the Wuxi market by 200 yuan/mt for fourconsecutive days as of Thursday July 18.
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Drivers of the nickel bull run also include weaker-than-expected output cuts by stainless steel mills, tight supplies of ferronickel as well as Indonesia’s potential ban on raw ore exports. Earthquakes in Indonesia and mining audit in the Philippines also briefly buoyed the market.

Growingproduction of nickel pig iron, however, remains a headwind against nickelprices. Capacity ramp-up has turned the NPI market from a deficit to atight balance in June-July. SMM data showed that China’s production of NPIexpanded 3.44% from May to stand at 49,500 mt in Ni content in June.

https://news.metal.com/newscontent/100951854/Market-optimism-to-prop-up-nickel-in-short-term/