Nickel quotes went back from the medium-term downtrend in March, but still have not formed a new directional trend. A flat pattern is gradually forming with the upper boundary just above the 24000 level and the lower boundary at 22400. Last week the price just bounced back up from the 22400 level and may be headed towards the 23700-24000 range. In that case, there might be an opportunity to open short positions with the target to return to the 22400 level.
The nickel market in China remains weak. Stainless steel producers are pushing for a reduction in nickel purchase prices. At the same time, there is still a lot of nickel in storages of both Chinese and Indonesian suppliers. We still need to pay attention to whether traders will sell nickel at a discount to boost demand. This could lead to even more price declines. Thus, weak demand continues to put pressure on nickel quotes.
Tesla intends to use cheaper batteries in the production of its electric cars. The main material for batteries instead of nickel will be iron. Corporation CEO Elon Musk also supported the use of lithium-iron-phosphate (LFP) batteries supplied by Chinese companies.
Tesla plans to use LFP batteries in the manufacturing process of its new Semi Light electric trucks. The date of launch of these vehicles in production is still unknown. Shipments of Semi trucks with nickel-based batteries to the international market began back in December.
New Tesla electric cars with iron batteries could help reduce assembly costs. Also an advantage of using LFP in electric vehicles is that there is less risk of ignition.
Since the rebound of nickel from the local low just started, it is worth to wait for the price to come to the range of 23700-24000 and open short positions there. The main target is returning to the 22400 level.
The following trading strategy option can be suggested:
Sell nickel if the price rises to a range of 23700-24000. Take profit – 22400. Stop loss – 24000.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.
This content is for informational purposes only and is not intended to be investing advice.
