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Last Updated : Feb 23, 2019 12:00 PM IST | Source: Moneycontrol.com

Nickel - falling inventories suggests continued strength in prices!

We can expect LME Nickel prices to test USD 14,500-USD 15,300 per tonne in the coming months.

Moneycontrol Contributor

Sakina Mandsaurwala

Precious Metals ended the week almost unchanged. Gold and Silver prices spiked towards USD 1349.8 and USD 16.19 levels respectively but witnessed profit booking after the release of slightly hawkish FOMC minutes. Base metal prices were trading higher tracking cues with US President Trump’s positive comments towards the progress over trade deal. Nickel ended the week with most gains of 5 percent, Copper and aluminum prices both rallied by more the 3 percent while Lead and Zinc managed to close the week on a slightly positive.

Energy markets too followed the gains in commodity markets with both Crude oil and Natural gas prices closed higher by 2.5 percent. Crude oil prices stayed supported as the Saudi Arabia remains firm on bringing back the global oil market to balance by April. Natural gas prices found support from higher than average gas withdrawal.


Nickel has started the year positively on increasing stainless steel consumption and higher electric vehicles sale. Nickel prices have rallied by 22 percent since the start of the year. According to statistics provided by INSG, the global nickel market ended 2018 with the deficit of 127,600 tonnes, higher than 117,000 tonnes deficit in 2017.

Also, global nickel stockpiles have fallen below 200,000 tonnes during February, their lowest levels in more than five years. Strong demand for Class 1 nickel grade is continuously ahead of supply. Falling inventories suggests huge structural deficit of nickel will be seen sooner.

Electric vehicles is driving optimism in the industry as EV demand is set to increase by more than 3 times in a decade. With the stable demand from the stainless steel market and an entirely new demand of nickel from EV market suggests that the global nickel demand is set to rise creating a higher deficit scenario in 2019.

We can expect LME Nickel prices to test USD 14,500-USD 15,300 per tonne in the coming months. Currently the LME Nickel prices are trading at USD 13,040 per tonne.

The Author is Commodity Analyst at Narnolia Financial Advisors.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Feb 23, 2019 12:00 pm