Recent data released by the London Metal Exchange (LME) demonstrate a fall in nickel reserves to 43,000 tons as of April 3. It is a new low over the past years. The Shanghai Futures Exchange (SHFE) has also seen a reduction in nickel stocks for three consecutive weeks. Total reserves dropped by 15.8% to 1,800 tons by March 31. This level is a new low in almost 8 months.
Declining nickel stocks on global exchanges might increase demand for the metal and its price.
In addition, the news of Merdeka Battery Materials' IPO could have a significant impact on nickel’s pricing. A successful IPO with gathering enough funds to expand production might increase nickel supply in the market. However, the prospects of the company’s growth might also stimulate demand for the metal.
It is worth noting that Merdeka Battery Materials is not the first company to launch nickel production using acid pressure leaching technology. It has already been introduced by another nickel company in Indonesia — Harita Nickel. However, Merdeka Battery Materials will be the second-largest IPO in Indonesia’s nickel industry, indicating serious investors’ interest in this sector of the economy.
The proceeds from Merdeka Battery Materials' IPO will be used to replenish working capital and repay loans, which could help increase nickel production in the future.
A week before, nickel prices left the downtrend on the H4 timeframe, showing that a new trend is forming.
The price is correcting in a narrow range of 22,920 – 24,310 on the H1 timeframe. The support level at 22,920 is tested, a pullback from which will give the movement to the opposite boundary of the range. Now the price is in the zone of profitable purchases.
Signal:
The short-term outlook for nickel suggests buying.
The target is at the level of 24,310.
Part of the profit should be fixed near the level of 23,720.
Stop-loss is set at the level of 22,410.
The bullish trend is of short-term nature, so it is worth to choose the volume of trade not more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
