Nickel prices pulled back on Friday as traders awaited clearer signals on whether Chinese companies would proceed with coordinated output cuts at their Indonesian operations, according to The Edge Markets. Three-month nickel on the London Metal Exchange (LME) fell 1.15% to US$15,935 a metric ton as of 0730 GMT, giving back part of Wednesday's gains. On the Shanghai Futures Exchange (SHFE), the most-traded November nickel contract closed 1.53% lower at 120,300 yuan (US$18,030.85) a ton.
Reuters reported on Thursday that Chinese producers in Indonesia were considering halving output of mixed hydroxide precipitate, a feedstock used to make electric vehicle battery chemicals, and cutting nickel pig iron, a stainless steel ingredient, by 20%. According to the same report, no final decision had been reached, and the size and duration of any cuts remained uncertain. Australia-listed Nickel Industries said producers at the Indonesia Morowali Industrial Park would coordinate cutbacks, without providing figures.
Traders remained sceptical about whether the proposed cut would eventually materialise, and whether it would account for reductions already underway across the industry for months. Chinese broker Galaxy Futures said high inventories and weak demand were limiting nickel's rebound this week. It noted that production schedules for nickel-based batteries were easing and that stainless steel demand was falling short of seasonal expectations, adding that the market was waiting for the proposed cuts to materialise.
Warehouse stocks remained at elevated levels despite recent drops. LME nickel stocks stood at 280,674 tons as of Wednesday, while SHFE warehouse stocks held 105,488 tons as of Friday, according to both exchanges' latest stock reports. The International Nickel Study Group last week forecast a small global nickel surplus this year, reversing an earlier deficit forecast.
Among other LME base metals, copper gained 0.63%, zinc rose 0.57%, lead added 0.32%, aluminium was up 0.27% and tin climbed 1.00%. On the SHFE, copper closed 0.08% lower and zinc fell 0.53%, while aluminium gained 0.77%, tin rose 0.37% and lead added 0.19%. Sources: The Edge Markets, citing Reuters, Nickel Industries, Galaxy Futures, the International Nickel Study Group, the London Metal Exchange and the Shanghai Futures Exchange.
Source: theedgemarkets.com