(MB) Nickel prices on the Shanghai Futures Exchange were up strongly during morning trading on Wednesday March 27, tracking the strength exhibited by the three-month nickel price on the London Metal Exchange on Tuesday. The most-traded May nickel contract on the SHFE stood at 101,550 yuan ($15,124) per tonne as at 9.53am Shanghai time on Wednesday, up by 1.8% or 1,810 yuan per tonne from Tuesday’s close of 99,740 yuan per tonne. This morning’s strength follows a similar performance by the three-month nickel price on the LME on Tuesday, when it closed up by 1% at $13,105 per tonne, with the price finding support from the emergence of dip-buying. Promising downstream demand continues to lend support to nickel despite the metal’s less positive fundamentals.
Due to a strong mining performance in 2018, the global nickel supply deficit is expected to narrow sharply in 2019, according to the International Nickel Study Group (INSG). The INSG forecasts the deficit in the global refined nickel market will narrow to around 33,000 tonnes this year, compared with the approximate 127,600-tonne deficit for 2018. But strong demand from the downstream stainless steel sector is likely to offset the bearish sentiment, according to Fastmarkets analyst Andy Farida. “Downstream demand, especially from the stainless steel sector looks bullish on paper,” Farida said, citing data from the International Stainless Steel Association which reported a 5.5% year-on-year increase as global stainless steel melt shop output totaled 50.8 million tonnes in 2018, edging higher from 48.1 million tonnes in 2017. “Going forward, fundamental challenges especially from the supply side, will weigh on the upside but any improvement in global demand should underpin nickel’s price action to stay relatively well-bid,” Farida added. Zinc was the second-best performer on the SHFE this morning, underpinned by continuous declines in exchange inventories. The most-traded May zinc contract price on the SHFE rose by 0.6% or 140 yuan per tonne to 22,365 yuan per tonne as at 9.53am Shanghai time. Deliverable zinc stocks at SHFE-approved warehouses declined by 8,064 tonnes, or 6.5%, week on week to 115,974 tonnes in the week ended March 22. Meanwhile, LME zinc stocks were at 56,425 tonnes on March 26, down from 129,000 tonnes at the beginning of the year. “LME zinc inventories have continuously declined, which will support prices in the near term,” analysts with Citic Futures Research said in a morning note.
