SHFE nickel price seen continuing to fluctuate

The price of the most-traded nickel contract on the Shanghai Futures Exchange for September has tracked down since entering July, with Wednesday's settlement price losing Yuan 2,820/tonne ($434/t) on day to close at Yuan 112,660/t.

The price of the most-traded nickel contract on the Shanghai Futures Exchange for September has tracked down since entering July, with Wednesday’s settlement price losing Yuan 2,820/tonne ($434/t) on day to close at Yuan 112,660/t.

The appreciating US dollar led market participants in Shanghai to scale back their purchases of the base metals as hedging tools including nickel, which also led SHFE nickel prices to soften, according to a Shanghai-based futures analyst.

As of July 3, the Yuan-US dollar exchange rate was at Yuan 6.65=$1, with the Chinese currency losing 3.4% on day to reach a new low since last December 20, according to the data from China’s State Administration of Foreign Exchange.

Nickel futures prices in Shanghai fluctuated in June. “The rises and falls can be traced the changeable global trade situation, especially between China and US,” a Chinese market watcher said, adding that nickel prices are now easily affected by macro policies. In mid-June US President Donald Trump slapped import duties on China-origin products equivalent to $50 billion which China immediately countered with new tariffs on US imports of the same value, as Mysteel reported.

“Market participants tend to be more cautious in buying or selling, and are more willing to choose short-term investment strategies which lower their risk of being severely hit by a bombshell. Under such circumstances, nickel prices cannot enjoy stability,” a Shanghai-based nickel analyst said.

Nickel futures prices will continue the fluctuate but hover at a high level, backed up by tightened supply and thinning inventories, as Mysteel has reported. “The recent growth of nickel prices has just been wiped out by the decrease in prices over the past three days. The back and forth should be the norm for nickel prices in the near term,” he added.

Written by Venus Wang, wangyi@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com