Full boom! LME nickel violently pulled up nearly 10% in 24 hours Shanghai nickel main contract up and down

Financial Associated Press (Shanghai, editor Xiaoxiang) news, the recent supply side continues to face a shortage of nickel prices, since the overnight European and American hours have once again "demon wind masterpiece".

LME nickel rose sharply for the second consecutive session in the Asian session on Thursday (January 20), with a cumulative increase of 9.7% in just 24 hours, and a strong rise above the $24,000/ton mark in the morning of the day, the first time in more than 10 years.

Following a 25% and 18% rise in 2021 and 2020, the price of nickel in the LME period has risen by nearly 17% again in less than three weeks so far this year.

Shanghai nickel prices also broke out strongly on Thursday, and the limit was sealed before noon. The main Contract of Shanghai Nickel rose 8% during the day to 176280 yuan / ton.

Nickel is mainly used in the production of stainless steel and electric vehicle batteries. The current severe shortage on the supply side is forcing traders to pay a huge premium to obtain this base metal. Inventories in LME registered warehouses have fallen from more than 260,000 tonnes last April to about 94,830 tonnes today. The shanghai futures exchange warehouse inventory of 4711 tons, also close to the record low.

The London Metal Exchange nickel spot/three-month futures spread has surged to its highest level in more than 10 years this week as exchange inventories have fallen sharply.

On the news side, according to industry sources, the Tagaung Taung nickel processing plant in Myanmar's Sagaing province was shut down this month due to a power outage, and three power plant towers of the project were blown up. The plant can produce 85,000 tons of nickel-iron per year, making it the largest nickel production base in Myanmar.

The recent all-round interest rate cuts by the People's Bank of China have also contributed to a certain extent to the rise in the context of abundant funds in the domestic market. The January 2022 Loan Market Quoted Rate (LPR), released by the National Interbank Lending Centre on Thursday, showed a 5-year LPR cut by 5bp to 4.6 percent, the first cut since April 2020. In addition, the 1-year LPR was further revised down by 10 bp to 3.7 percent after a 5 bp cut in December last year.

Sucden analyst Geordie Wilkes said, "We continue to be bullish on nickel, the market may see some weakness in the short term, but from a fundamental point of view, there is nothing to worry about at the moment." ”

Wang Yue, an analyst at Shanghai East Asia Futures Co., Ltd., said, "In addition to China's latest liquidity easing policy, the extreme tight supply of metals is also a key driver of price increases. In the case of nickel, demand for ev batteries is so strong that instant supply cannot keep up. ”

Guotai Junan Futures believes that the bombing of three power plant towers of the Chinese-funded Dagongshan nickel smelting project in Myanmar has affected the supply of domestic FENI, and the products of the project have an impact on the supply of raw materials for some state-owned steel mills in China, and nickel prices and steel prices have strengthened. Nickel global dominant inventory is low, while the domestic import window is frequently closed, and the low willingness of buyers leads to tight domestic supply. We expect nickel prices to remain strongly upwards until Indonesian MHP and high-ice nickel land in the second quarter and significantly hedge refined nickel demand.

In addition, Soochow Futures said that with the current strong overseas demand, the nickel market is experiencing serious contraction in the short term. In the context of the continuous decline in global inventories and the continued tight supply, nickel is expected to remain strong in the short term.