The price of nickel has fallen to its lowest levels since the middle of 2022. Earlier this level was bought back many times. Prospects for an increase in the U.S. debt ceiling could support investor demand for the metal. It is quite possible that the issue of the borrowing limit will be finished this weekend. Production drivers for the metal rebound are also starting to emerge.
Nickel quotes in China rose due to low supply on the market. Plants increased selling prices of metal on the background of low reserves. However, stainless steel prices have fallen even more expecting an increase in supply. Nickel remains under pressure because trading is going on amid problems with economic growth.
Future demand for nickel will be increased because of its widespread use in the transition to clean energy. In order to meet this demand, there is a need for serious investment in production. At the moment there is not enough investment in nickel production.
According to Mike Henry, the head of the BHP mining company, decarbonizing of the industrial sector requires a massive investment. The manufacturer estimates that if temperatures rise by 1.5 degrees, the sector will require an investment of about $250 billion during the next 6-7 years. This scenario is relatively positive, but does not correspond to the real values, which are limited by the inflow of only 40-50 billion dollars.
Expanding a scenario with a rise in temperature by 1.5 degrees, Henry noted a significant increase in demand for steel, copper and nickel over the next 30 years. To meet demand, production should be doubled.
According to the technical analysis, the price of nickel is at a local minimum. This level has been tested many times over the last year, so a bounce up from it is highly probable. The fundamental drivers for metal growth are improving. The first upside target will be a resistance level of $22,500. Stop-loss can be set at the renewal of yesterday's lows at $20,830. The possibility for a further decline would be opened if it goes below the Stop.
Rise in the price for nickel:
Take profit – 22500
Stop-loss – 20830
This content is for informational purposes only and is not intended to be investing advice.
