NICKEL, a laggard in last one month’s base metal rally, seems to have joined the other buoyant metal counters like copper and lead with a gain of 17% in the past 10 days.
Currently trading at $12,500 per tonne at LME, nickel prices are up 25% from their early April lows. Domestic prices as reflected by June futures on MCX (Multi Commodity Exchange), stand at Rs 610 per kg, up 6% from Friday’s close of Rs 557.
Analysts, however, attribute this gain to a break out of a range in the international prices since mid-February, with the rally in its counterparts like copper adding support. “Nickel has managed to pace up with the rally in metals like copper while a breach of $10,800 turned out to be a trigger for the rise,” said Navneet Mathur, research analyst, Anand Rathi Commodities.
While all base metals including copper and lead, have experienced a significant rebound since Mid-February, it is interesting to note that nearly 90% of the total gain in nickel prices has happened in April.
A number of nickel smelters have announced production shut down, but an expected decline in global steel demand continues to weigh on future nickel demand. According to China Iron and Steel Association, steel output in China, the largest producing nation, may drop by at least 8% this year.
According to Praveen Singh, the stock levels in LME are very high for the price rally to gain a fundamental support. “It will be difficult for international prices to move past a strong resistance range of $12,100-12, 500,” he added. Currently, Nickel LME inventory stand at 105,264 tonnes, down 2% from a 13-and-a-halfyear high of 107,682 tonnes, reached on April 2.
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