The continuous rise of nickel price is supported by low inventory for a long time. Under the frequent operation of early futures contract replacement, long funds crowding out, and spot traders moving out, the monthly difference is constantly expanding. In addition, the recent recovery of downstream sentiment, coupled with the influence of macro factors, also pushed up nickel prices. The reasons are as follows:
Domestic inventories hit a new low since Shanghai nickel listing,China Market
Downstream stainless steel industry sentiment improved Recently, the domestic stainless steel production gradually recovered from the trough at the beginning of the year, in February and March output rose steadily, in February, the national output of stainless steel mills 2.8 million tons, of which 3 series of 1.48 million tons; In March, the output of stainless steel mills in China was 2.977 million tons, of which 3 series were 1.46 million tons. While the national stainless steel social inventory began to decline from the peak, as of April 13, the national stainless steel inventory decreased to 1.186 million tons, of which 300 series 697,000 tons, the total inventory compared to the historical inventory peak on February 24 decreased by 15.9%, 300 series is more than 20% out of storage. It is expected that the future stainless steel downstream demand will be a continuous recovery process.
Macro factor perturbation
The Federal Reserve released the minutes of its March monetary policy meeting. Fed policymakers, in the wake of last month’s bank rampage, scaled back expectations of an interest rate rise this year and stressed they would remain vigilant to the possibility that the credit crunch could further slow the economy. According to the Fed’s dot plot released after its March meeting, most senior leaders favor just one more quarter-point rate hike by the end of 2023.
On April 10, it was announced that 236,000 non-farm jobs were created in the United States in March, which was the lowest in 27 months and still slightly higher than expected. The unemployment rate and hourly wage growth unexpectedly fell slightly. Futures markets are pricing in a 70 percent chance of a quarter-point rate hike in May.
On April 12, the US CPI rose 5% year-on-year in March, lower than expected, slowing for the ninth consecutive month. The rebound in core CPI under housing pressure remained high.
On April 13, U.S. PPI rose 2.7 percent from a year earlier, below expectations of 3 percent. It was also the ninth consecutive month of slowdown and the smallest increase in more than two years.
Several days of economic indicators have shown that dollar inflation has entered a phase of easing, and the market has become more bullish.
Conclusion:
At present, the high nickel price is supported by the long-term low inventory. At the time of the exchange of contracts, the nickel price is climbing under the fund game, and the downstream sentiment is recovering, macro sentiment will also push the nickel price further higher. In the short term, it is expected that the support of 170,000 mark is still strong.
On the other hand, nickel raw material oversupply is expected to remain unchanged in the medium to long term, especially in pure nickel, where a significant amount of new investment and capacity expansion is being realized during the year. It will take a long time for demand to heal, and fears remain widespread. Short-term attention should be paid to nickel inventory changes and the impact of sudden news on market sentiment, beware of nickel prices may fall.
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