Nickel On MCX Settled Down -0.35% - Ways2Capital

On MCX settled down -0.35% at 572.10 traded with weakness tracking LME Nickel which ended down 0.1 percent at $8,915 as Chinese demand appears to be slowing also US services sector activity slowed in May as new orders tumbled, but a jump in employment to a near two-year high pointed to sustained labor market strength despite a deceleration in job growth last month. LME Nickel touched a near one-year low of $8,700 per tonne on the London Metal Exchange (LME) last week. 

It has recovered a little to $8,900 this morning but that still makes it by some margin the worst performer among the major LME-traded industrial metals with a year-to-date decline of over 10 percent. Pressure also seen after the report from Goldman Sachs that suggest that the stainless steel ingredient is going to stay at these bombed-out levels for a good while.

The Wall Street heavyweight has just downgraded its three-month, six-month and 12-month price forecasts to $9,000-per tonne from $12,500, $11,000 and $11,000 respectively. "We now expect that nickel prices will remain trading at very low levels through 2017 and much of 2018 until a substantial supply response both in China and outside of China eradicates our forecast surplus of 37,000 tonnes in 2017 and circa 100,000 tonnes in 2018," according to Goldman.

This marks the collapse of nickel's previous bull narrative of mass mine closures in the Philippines. As that scenario rapidly recedes, nickel is once again facing a long war of producer attrition to rebalance supply with demand. Now technically market is getting support at 569.2 and below same could see a test of 566.2 level, And resistance is now likely to be seen at 576.2, a move above could see prices testing 580.2.

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Suhani Verma

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