Future Trend Of Nickel

March 7th, for the nickel market, is a historic moment, the domestic Shanghai nickel continuous trading limit, the foreign market lunni once rose 90% to 55000 DOLLARS, closed up 21170 dollars to 50300 dollars, or 72.67%. Lenni prices soared, unrelated to the fundamentals, the main reason lies in excessive concentration of warehouse orders, empty orders were forced to stop.

Behind the sharp rise in nickel prices

The global nickel market has seen a significant increase in supply. Data show that in February 2022, Indonesia's production of medium and high nickel iron metal was 82,700 tons, a decrease of 4.04% month-on-month and a year-on-year increase of 32.46%. Under the background of high price, the demand for nickel in the downstream market is bound to be suppressed, many steel mills said that the high nickel price is unbearable, and the demand for nickel is obviously not too good.

Despite the rapid growth of the new energy field, nickel demand growth base is low. In December 2021, the global consumption of nickel sulfate was 19,600 tons of nickel sulfate. In February, 38 domestic nickel sulfate enterprises produced 11,800 tons of nickel sulfate in February, equivalent to 24,800 tons of metal, with a sequential decrease of 2.58% and a year-on-year increase of 57.42%. It shows that supply has more than kept up with demand growth in recent years.

This shows, nickel price rises, completely irrelevant basic supply relation. There are rumors that there are large empty sheet facing delivery difficulties, forced positions lead to a sharp rise in nickel prices. Nickel price cooling, pending this empty order can be completed about.

In the face of unprecedented volatility, the LME, which was acquired by Hong Kong in 2012, made two important timely decisions to stabilise the market:

First, Members and their clients are prohibited from placing day-after arbitrage orders such as nickel at any LME execution location at a price that exceeds 1% of the previous day's official spot price of the metal concerned.

That means limiting customers to buying more than 1% of the previous day's official spot price. This limited the nickel market, continue to chase more behavior, greatly weakened the driving force of the nickel rise, next, the price of nickel rise, can only rely on empty single stop loss to close positions. Compared with renni, the rise will be greatly limited.

And the spot market, because the actual supply is not progress, so the price is difficult to quickly rise to the current lenni $50,000 price, if the main makers want to vigorously push up the spot nickel price, not only their own price is very high, even if successful, can not achieve their purpose.

Second, as a last resort, the exchange may defer the delivery of short positions in these metals on or after the delivery date of March 9 if the delivery obligation cannot be met or the metal cannot be borrowed in backwardation at a level not exceeding 1 per cent of the official spot price of the metal on the previous day.

Fubao interpretation: large empty orders, in the case of delivery on time, can be postponed delivery. This makes large empty single customers, there is more sufficient time to prepare for delivery of nickel plate. Although at present a large amount of stock in the hands of the main bulls, but due to the global nickel market actual supply is sufficient, a long time. Short side can collect more nickel plate, delivery LME delivery, to a certain extent, broke the main long short forced short exchange plan.

以上两点,所有镍价格构成n obvious negative impact. In view of this interpretation, we are relatively optimistic that lenni prices are not likely to continue to rise crazily, short term does not exclude the main bulls, some of their own empty single positions to push nickel prices. But for a long time, may gradually high shock weak, return to rational. Affected by a sharp rise in the external market, the medium-term spot market nickel related product prices, may continue to rise, nickel plate may maintain a period of time between 200,000-300,000. Unable to withstand the overall oversupply of nickel city, nickel prices will fall.

But a few months later, as the main bear to collect more warehouse orders as scheduled delivery, the main long may not bear the financial pressure, flat off more than single, nickel prices will fall sharply, but it is also possible to unite more capital to continue to protect nickel prices. That may depend on policy behaviour in Indonesia, the Philippines and Russia, where nickel deposits are concentrated.