Supply-side hype faded and nickel prices fell

According to the monitoring of nickel prices by business associations, the spot price of nickel on August 12 was 122,833.33 yuan/ton, which was 2.71% lower than 126,250 yuan/ton on the previous trading day, 37.23% higher than the beginning of the year and 20.53% higher than the previous year.

Prior to that, nickel prices surged by more than 40 points on the basis of multiple bullishness.

Since this year, nickel prices have been in a good trend. In addition to a slight drop in March-June, nickel prices have soared to a new high of 126,250 yuan/ton at the end of June, up 41.05% from the lowest point at the beginning of the year, which is equivalent to the historical price level of 14 or 15 years. Nickel prices soared, mainly due to Indonesia’s possible ban on nickel exports in 2020, speculation about the second mining review in the Philippines, the impact of the Indonesian earthquake on town exports, and the release of ferronickel production capacity was not as good as expected.

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Indonesian mining ban speculation suspended Shanghai nickel plunged by more than 5%.

After nickel prices hit a year high on Friday (9), it was reported that Indonesian President stressed that there are still many infrastructure projects in the country lacking foreign exchange input as construction funds, and no further discussion on the date of advance ban. Bambang Gatot Ariyono, Director-General of the Indonesian Mining Authority, said the industry would follow existing rules and that the market would ignore rumors as long as no new rules were introduced. Rumors of Indonesia’s early ban on mining, which has been hyped for many days, have temporarily come to an end, and nickel prices have fallen back.

According to the current nickel futures table of business associations, nickel spot price is higher than the main contract price in the near future. The main contract price is the price of nickel in the next two months. Before that, both spot nickel price is higher than the main contract price. Today, there is a turning point between the two, which shows that people are feeling better about the future nickel price.

There is no need to be overly pessimistic about supply-side tightening

Although the price of nickel had risen sharply before, which was disturbed by the supply side and the stock was low, a large part of it was due to market debates, capital speculation and hot nickel price speculation. So once the market rumors, Indonesia should ban mining ahead of time, regardless of the truth, nickel prices continue to rise and fall. Now, as soon as I heard that Indonesia’s early ban on mining proved untrue, market panic and selling psychology caused the price of nickel to fall sharply. But in the long run, the tight supply of nickel ore still exists. The depletion of nickel ore resources is an objective fact. Even if Indonesia does not ban mining in advance for a short time, who is not sure that this wave of operations will come again, even if it does not ban mining now, it will be banned by 2022, in terms of Indonesia’s virtue of changing day by day. The second round of review of mines in the Philippines is also ongoing, which will more or less affect the supply of nickel prices. So the tight supply of nickel ore is a long-term situation, which supports the price of nickel.

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Reasonable high drop nickel price short-term high shock

Liu Meimei, an analyst with business associations, believes that nickel prices fell sharply on Monday (12th). Spot nickel prices have soared by more than 40% before, with no 100-day bonus and no 100-day rise in prices. The high drop is also a rational demand. Whether Indonesia bans mines in advance, true or false, more hype is a mood, bans will not be banned now, has little impact on the current fundamentals. Previously, the corresponding price of low inventory is within a reasonable range. Now it is still the off-season in August. The demand is limited and can not be supported by demand. Nickel price is difficult to rise in place step by step. The current pattern of high-level shocks is influenced by the news and macro-level. High nickel prices are expected to remain in the peak season of September and October. Nickel prices may rise to a new height with rising demand and the closure of production in October of the highest-grade nickel mines in the Philippines.