Nickel highlights

摘要

Nickel made the biggest positive move of all the base metals last week, as cash prices gained 1.6% and its other major peers were generally flat. Nickel's outperformance was more to do with market positioning than improving fundamentals, as the relative scale of short positions is believed to be largest in this market, thereby providing more ammunition to rally when the Fed's surprising delay in QE tapering triggered widespread short covering. The real test now is whether the price bounce can be built upon. It is certainly not out of the question, as Chinese macro data released over the past few weeks has shown that factory output, exports, retail sales and fixed asset investment all rose in August. This should underpin an improvement in physical demand overthe coming few months - something that the gradual rising trend in LME cancelled warrants is also indicating. However, LME stocks are still rising and this is an almost daily reminder of the over-supply burdening this market. Because of this nickel price rallies recently have been seen as selling and shorting opportunities and undoubtedly there will be a contingent in the market that views the latest rally the same way. But each rally has not pulled back as far as the last, and a gentle uptrend has developed from the early-July low point. We think this gradual recovery is sustainable, as speculative shortens will become less aggressive as signs of more solid demand growth are seen.