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Nickel prices led on the upside with the metal finding support from declining exchange inventories – indicating healthy consumption – and the expectation of greater demand in line with the development of the electric vehicle sector.
The most-active September nickel contract on the SHFE traded at 117,370 yuan ($18,042) per tonne as at 10.32am Shanghai time, up 370 yuan per tonne or 0.3% from last Friday’s close.
Nickel inventories at London Metal Exchange-listed warehouses remain at their lowest since March 2014 at 274,476 tonnes as of last Friday.
SHFE nickel stocks, meanwhile, dipped 1,292 tonnes last week to stand at 27,828 tonnes as of last Friday. Stocks are now down by 43% since the beginning of the year.
The positivity surrounding nickel’s prospects in the electric vehicle sector has also lent support to the metal’s prices, but there are some concerns that prices may have pushed too high too soon.
“There are expectation of huge nickel demand on the horizon by the mid-2020s and beyond, predominantly from the electric vehicle sector,” Daniel Briesemann, analyst at Commerzbank, told Metal Bulletin.
“This might be enough to push the price higher but we think there’s a lot of hype at the moment which is not yet justified. I think you’ll see some lower prices in the mid-to-long term,” he added.
Meanwhile on the supply side, the latest figures from the International Nickel Study Group (INSG) reflect bullish underlying fundamentals for nickel, with the refined market in a 52,600-tonne deficit in January-April 2018, according to Metal Bulletin analyst James Moore.
“In addition, the INSG expects the market to record a deeper 117,000-tonne deficit in 2018 than the 53,000-tonne deficit forecast in October, supported by rising demand growth from the stainless steel sector and for nickel-containing batteries,” he added.
Zinc was the worst performer of the SHFE base metals complex this morning, pressured by tightening spreads and elevated exchange inventories.
LME zinc stocks dipped 200 tonnes last Friday, but at 247,250 tonnes, have risen more than 36.6% since the start of the year.
SHFE zinc stocks similarly fell last week, declining 1,261 tonnes to 95,696 tonnes as of June 22 – but still up by 23.6% since January 5.
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