Nickel On MCX Settled Down -1.89%

Nickel on MCX settled down -1.89% at 595.40 dropped on profit booking as trader exits there long position as thin volumes amid a major vacation week in the US, nickel prices took another hit with the commodity falling to around $9,100 per ton, erasing a chunk of its recent recovery rally. LME nickel slumped to a one-year low of $8,680 in June, but then recovered to around $9300 before going through its recent sell-off. This week, the slump came after an Indonesian mining ministry official said that two more companies have been issued recommendations to export mineral ores.

PT Ceria Nugraha Indotama has been permitted to export 2.3 million tons of nickel ore through to July 2018 and PT Dinamika Sejahtera Mandiri is allowed to export 2.4mt of bauxite. Nickel prices have been erasing the gains they experienced in 2016 amid constrained supplies. In 2017 the supply situation has gone through a rapid reversal as the Indonesian government relaxed regulations that previously banned nickel ore exports while Philippine nickel miners are positioned to restart operations with a new acting environment minister.

While the two countries are increasing their nickel exports, other nickel miners are starting to review low performing assets. According to Reuters, Brazil’s Vale is reassessing its loss-making New Caledonian nickel operations after new Chief Executive Fabio Schvartsman took charge last month. With nickel trading around $9,000 a ton, many nickel operations are running at a loss.

Further complicating the situation, it does not seem likely that prices will recover anytime soon with Indonesia just starting to ramp up exports, while Philippine nickel production should soon follow. Technically market is getting support at 589 and below same could see a test of 582.6 level, And resistance is now likely to be seen at 604.9, a move above could see prices testing 614.4.

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Suhani Verma

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