Nifty99000 100%

Sensex99000 100%

Article rating: 5.0
Tags:
Article rating: 4.3
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: No rating
Tags:
Article rating: 4.1
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: No rating
Tags:
Article rating: No rating
Tags:
Article rating: 2.0
Tags:
Article rating: 5.0
Tags:
RSS

Shaky start to Nickel prices this year

Author: Vinod Jayakumar/Wednesday, February 6, 2019/Categories: Exclusive

Shaky start to Nickel prices this year

Nickel prices started the year on a weaker note weighed by the concerns of global economic growth.

China’s Caixin manufacturing PMI, which tracks the activities of small and medium-sized enterprises, dipped below the 50.0 mark for the first time since May 2017 to 49.7 in December, adding pressure on prices.

Despite weak economic growth stats released by the International Monetary Fund on January 22, prices gradually increased on a consistent basis from Rs 740.90 per kg to Rs 884.9 per kg till January 31. Nickel prices did not factor in China’s quarterly GDP numbers, which stood at 6.4 per cent, raising concerns over demand from the top metal consumer. This slowdown in growth rate was unseen in the past 28 years, weighed down by weak investment and faltering consumer confidence as Washington piled on trade pressure.

In the global economy, as nickel prices fell in 2018, Global Ferronickel opted to ship higher-grade ores to maximise profitability. It shipped 5.709 million tonnes, which was 3.8 per cent higher than its 5.5 million tonnes target. Chinese construction steel rebar futures edged lower in the beginning of January as investors remained cautious amid concerns about the state of the economy. However, Beijing has pledged to boost domestic spending and control steel capacity. Stocks of steel products held by Chinese traders, an indicator of demand in the country, rose by 453,200 tonnes as of January 11 to 8.83 million tonnes, supporting the need for nickel. Traders generally replenish their stocks ahead of the Chinese New Year break, which is due in early February this year, and sell them when downstream users go back to work after the week-long holiday.

On the fundamental aspect of Nickel, during the first 11 months of 2018 the deficit widened to 123,900 tonnes from 100,300 tonnes in the same period of 2017. The nickel market was in deficit during January to November 2018 with apparent demand exceeding production by 6.5 kt. Mine production during January to November was 2,169 kt, 289 kt above the comparable 2017 total. In November 2018, refined nickel production was 212.4 kt and consumption was 201.5 kt. For the 11-month period in 2018, refined nickel production totalled 2079 kt and demand was 2085 kt. Towards the end of the month operational activity at Brazilian Vale got hampered due to floods and this supported the price rise in January amid the series of economic events which were negative to prices. Nickel inventories at LME warehouses were down from 206.10 kt to 197.925 kt during the initial half of January and later rose to 201.702 kt. However, at Shanghai warehouses, inventories were continuously recording lower levels and it stood at 12.693 kt at the end of January from 15.259 kt at the start of month.

Global nickel demand this year is estimated to be around 2.4 million tonnes. However, the ongoing trade dispute between the United States and China has hit prices of nickel as Chinese stainless steel mills are major consumers for the metal.

Nickel’s bull rally, partly based on the rise of demand for electric vehicles, is premature as stainless steel still accounts for about two-thirds of demand. This year, Nornickel, which vies with Brazil’s Vale to be the world’s largest nickel producer, plans to produce from Russian feedstock 220,000-225,000 tonnes of nickel. In 2018, consolidated nickel production was 218,770 tonnes, up 1 per cent. We expect Vale will prioritise supply to steel mills who signed long-term contracts with them, which means the amount Vale will put into the spot market will be less.

The author is a research analyst at Karvy Comtrade Limited.

Print Rate this article:
No rating

Number of views (661)/Comments (0)

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above

Finapolis Quiz

Which company derives its name from the words ‘Industrial Oxygen’?

 INOX 

 PVR

CINEPOLIS

Finapolis Poll

Did Union Budget 2019 presented by Nirmala Sitharaman meet your expectations?

Yes No Can't Say

Please answer this simple math question

3+2 =
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free