…but Slowing Chinese Growth a Cause of Concern
The global commodity markets have seen strong gains in recent times, thanks to a robust outlook for the world economy and an intentional effort by the producers to keep supplies in check. There has been a slowdown in Chinese economic growth owing a cooling property market and tighter credit conditions, but the same seems to have been offset by rising growth in the United States and Europe supporting the rise in price of industrial metals. China released its data, and it revealed that industrial output, fixed asset investment, and retail sales all performed below expectations.
Nickel Prices – EV Movement, along with Global Economic Optimism Support Strong Future for Nickel Prices & Demand
Nickel Prices Touched US$13,000, and Retreated back to $11300-11,400 levels, owing to strong resistance from long term downward trend line and as speculators booked profit amid waning optimism of quick increase in demand from EV vehicles. Prices jumped sharply earlier from $10,300 to 13,000, as $10,300 was a strong support in technical terms and there were expectations rise in nickel demand from electronic vehicles for the next many years to come. It is believed that the EV demand along with global economic growth, would certainly support nickel prices over the long term. Most electric cars are powered by lithium NMC batteries which use a cathode composed of nickel, manganese and cobalt and a graphite anode. The prices of cobalt have more than doubled so far this year, and I believe Nickel is next. We expect nickel demand to increase over the coming years, as a move towards the increased usage of electric vehicles going to gain momentum over the coming years.
Cancelled warrants (material slated for delivery from LME warehouses) for Nickel LME stocks has hovered around 35% levels since the past 4 months, indicating no major surprises on the demand on supply side. Nickel inventories at LME warehouses have remained stable this year, with no major movements. We will be closely monitoring this indicator – A gradual rise in cancelled warrants could be a sign of pick up in actual demand, while a falling ratio could indicate rising inventories and lower demand. The cancelled warrants ratio, as on 21st November 2017 stood at 35.6%, up from 35.0% as on 10th November 2017. Without an uptick in cancelled warrants ratio, any rally in nickel prices could be short lived.