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The most-active July nickel contract on the SHFE traded at 108,530 yuan ($17,013) per tonne as at 10.29 am Shanghai time, down 1,710 yuan per tonne from Friday’s close. Around 504,080 lots of the contract have changed hands so far this morning.
The dollar index stood at 93.81 as of 11.53am Shanghai time, up 0.13% from last Friday’s close. The index remains near its highest since December 18, 2017.
But the outlook for nickel continues to be supported by firm demand from China’s improved stainless steel industry and persistent declines in inventories at both London Metal Exchange and SHFE warehouses.
SHFE nickel inventories decreased 6,334 tonnes to 33,000 tonnes over the past two weeks as at May 18. Meanwhile, nickel inventories on the London Metal Exchange have fallen continuously since early May. Overall LME nickel stocks were at 305,748 tonnes on May 18, down a net 9,114 tonnes since May 4.
In supply news, Vale, one of the world’s largest nickel producers, announced that it would scale back investment in projects in Canada and New Caledonia and is taking out about 150,000 tonnes of production for the next three years to protect its reserves.
Meanwhile, nickel has also be supported by growing positive sentiment around demand from electric vehicles, with predictions from last week’s LME Asia Week indicating promising growth in the near term.
Nickel demand from electric vehicles is expected to surge ten-fold to 350,000-500,000 tonnes by 2025 from 36,000 tonnes in 2018, Robert Morris, Vale’s executive vice president of sales and marketing for base metals, forecast.
The rest of the SHFE base metals, except for aluminium, were up during the morning session on Monday, supported by an easing of trade tensions after the United States and China were seen to have made some progress during their talks in Washington, US.
A joint Sino-US statement issued from the White House on May 19 stated that China will help support growth and employment in the US by increasing purchases of the US’ goods and services. It says both sides agreed on meaningful increases in US agriculture and energy exports, with the US to send a team to China to work out the details.
“China’s Vice Premier, Liu He, stated both countries agreed not to engage in a trade war and will stop imposing new tariffs on one another,” ANZ Research noted on Monday.
The renewed positivity surrounding the cooling in trade tensions between the world’s two largest economies were broadly supportive to base metals complex this morning.
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