China’s premier Li Keqiang's speech at the World Economic Forum event in Tianjin has brought stability to the emerging market (EM), shoring up confidence and bringing back risk-on sentiment concurrent with the premier extendinghis view that China has ample policy tools to cope with difficulties and challenges. Kegiang added that China will not devalue the yuan to stimulate exports and the government will maintain steady growth.
Nickel can still rely on its bullish fundamental attributes, with the decline in global inventory levels, an optimistic demand outlook from the electric vehicle sector and the structural market deficit to boot. Even though China retaliated with new tariffs at 5% and 10% on $60 billion worth of US goods, the base metals complex has largely shrugged this off and the LME nickel price saw follow-through buying this morning, up 1.62% at the time of writing. With the trade dispute between the United States and China slightly toned down, nickel bulls may consider rebuilding at this discounted price level while shorts could consider covering some of their bearish bets.
A softer dollar index has provided tailwinds and nickel’s bullish micro dynamics should support higher prices for now. Total LME nickel stocks remain near the 2018 low at 232,068 tonnes after an inflow of 540 tonnes this morning was cancelled out by an identical amount of outflow. Meanwhile, nickel stocks in the SHFE have mildly recovered to 16,863 tonnes, though there is very little to suggest that a trend reversal is in store.
Physical business has picked up prior to a national day of holiday in China, with seaborne cargoes' delivery expected by the end of September. Yet nickel premiums in Asia stayed flat amid thin trading conditions. In Rotterdam, full plates' in-warehouse premium rose to $210-250 per tonne from $200-240 per tonne the previous week, while market liquidity increases with multiple deals pushing premiums higher. US Midwest premiums were unchanged. supported by limited availability. For our detailed global nickel wrap, please click here.
All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.