The rebound in nickel prices from the level of 23200 stopped at 24100. Although, technically, there is still some upside potential, supply and demand fundamentals are almost simultaneously indicated to lower nickel price. Today, we see nickel down again, and the return to local lows could be quite fast.
Representatives of BTR New Material Group, a Chinese battery material supplier, forecast nickel prices to decrease about two-thirds of their current level of $24,000 per ton to $8,000. Battery costs will fall sharply, and the electric vehicle manufacturers, who complain about high production costs, highly expect it. An increase in nickel mining capacity will contribute to this, especially in Indonesia and the Philippines.
BTR CEO Yang Shunyi spoke about his visit to Indonesia during the China Automotive Battery Innovation Alliance forum. The country is now actively building facilities with a planned nickel output of 4 million tons of metal per year. That’s why the supply of nickel will steadily exceed demand over the next few years, and this could be a factor of a significant drop in prices.
The International Nickel Study Group (INSG) forecasts a surplus of 239,000 tons of metal this year. This is the biggest surplus for the last 10 years that significantly exceeds last year's surplus of 105,000 tons. According to INSG, nickel production in Indonesia rose by 48% to 1.58 million tons last year and by 44% in the first two months of this year.
Now bears of the nickel market are still targeting a decline to 23200. If successful, the semi-annual lows around 22300 could be tested further.
We may offer you the following option of trading strategy:
Sell nickel near the level of 24100. Take profit — 23200. Stop-loss — 24700.
Also, traders can use Trailing stop instead of fixed Stop-loss at their disposal.
This content is for informational purposes only and is not intended to be investing advice.