Nickel on MCX settled down -0.19% at 671.50 traded in the range as trader having a muted response to the Fed’s decision to hike rates. The rate hike supported the US dollar, and while that should presure dollar-denominated nickel right now supply side developments are stealing the show.
Nickel outlook cautiously turning positive on the speculation that deficit may widen to 100 thousand tonnes in 2017, but major uncertainties on the supply side to persist as Indonesia to resume export of unprocessed ore and demand from China likely to soften while nickel exchange inventories are running high.
After nickel market moved into a minor deficit in 2016, market expect the deficit to expand to a substantial 100 thousand tonnes in 2017. However,market see major risks, which could materially affect our base case forecast. From the demand perspective, the growth of Chinese stainless demand for nickel units is likely to slow down given remarkably strong growth in 2016.
Nickel prices experienced a sell-off earlier this week following the sentiment that the commission on Appointments might reject confirming Regina Lopez as the head of the DENR. Lopez was instrumental in implementing the mining inspections as well as the suspensions. Ms. Lopez’s crackdown on the mining industry has been met with stiff opposition.
At first, when the mining inspections were announced market participants doubted that the government would actually enforce strict regulations, not wanting to give up the revenue that comes from mining. But, this was not the case. Even now, Philippine president Rodrigo Duterte continues to aggressively target the industry. Technically market is getting support at 666.2 and below same could see a test of 660.8 level, And resistance is now likely to be seen at 677.9, a move above could see prices testing 684.2.