Nickel On MCX Settled Down

Nickel on MCX settled down -2.02% at 587.10 as wariness over policy changes in two major nickel producing countries, Indonesia and the Philippines, is dragging the price of the metal down to 10-month lows. Indonesia and the Philippines accounted for almost 30 percent of global mine production in 2016, most of which was used to produce nickel pig iron — an alternative to refined nickel — in China and Indonesia.

So any suggestion of changes in the supply from either of these countries has a huge impact on market sentiment and, ultimately, prices. Since January, prices have averaged $10,135 a tonne but with a swing of plus or minus $1,863, or 18 per cent. This volatility stems from the mineral policies of both countries, which are in a state of flux. However, nickel's ability to shoot itself in the foot should never be underestimated and early this year Indonesia let loose with both barrels.

After banning ore exports in January 2014 to encourage domestic downstream investment, the government reversed that ruling in January this year. The market went into a spin and prices dropped to $9,377. Further clarification by the government on the permissible quantities of ore that might leave Indonesia, as well as the issue of the first export licences, sent prices down to $9,000/t by early May.

In the week ahead, investors will be looking to U.S. reports on building permits, housing starts, industrial production and jobless claims for fresh indications on the strength of the economy. Now technically market is under fresh selling as market has witnessed gain in open interest by 10.04% to settled at 38716, now Nickel is getting support at 581.8 and below same could see a test of 576.6 level, And resistance is now likely to be seen at 596.7, a move above could see prices testing 606.4.

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Suhani Verma

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