Nickel on MCX settled up 0.41% at 656.8 on short covering as nickel ore supply remains tight, which is leading to a significant output cut at nickel smelters. Meanwhile, stainless steel demand shows no signs of improvement in April, and de-stocking of hot and cold-rolled products pressed down the market, a sign of weak end-user demand. Indonesia’s ore export quota has been closely watched after its new export policy decision.
According to China Customs, China imported a total of 300,000 tonnes of nickel ore from Indonesia during the first two months of 2017. Indonesian nickel ore are estimated to keep flowing into China before the quota decision, and the monthly supplying volumes from the country to China will reach around 100,000 tonnes after learning from local nickel ore firms. Nickel ore supply remains tight, which will lead to a significant output cut at nickel smelters, mainly NPI producers, in April. There are only limited amounts of low-grade ore smelting capacity in Indonesia.
Application of low-grade nickel ore is limited in Indonesia, and Antam, recognized by the market, is the only one eligible for exports. In China’s domestic nickel market, downstream producers are wary of purchasing refined nickel as the 2017 Chinese New Year holiday is nearing. After New Year holiday, goods from bonded area flowed into domestic market, weighing down nickel prices. Technically market is under short covering as market has witnessed drop in open interest by -4.96% to settled at 27400 while prices up 2.7 rupees, now Nickel is getting support at 645.6 and below same could see a test of 634.3 level, And resistance is now likely to be seen at 663.6, a move above could see prices testing 670.3.