Vulnerable again

摘要

Nickel prices had been making what seemed like steady progress higher since thelate-August lows around $9,450/tonne on an official three-month basis. They hadclimbed as high at $10,730/tonne on October 9 and then consolidated comfortablyabove $10,400/tonne until almost the end of the month. But that constructive work hasnow been mostly undone by the latest US dollar rally. At the time of writing nickel wastrading around $9,500-9,600/tonne. While somewhat disappointing, the pull-backhas not gone far enough to change our view that prices are forming a bottom, and weshould expect oscillations like this within a broadly sideways trading range over thecoming weeks as this floor firms up. However, we would also warn that if $9,500/tonneis convincingly breached, then there is a danger that a fresh cascade of technical selling istriggered, which will put $8,800-9,000/tonne target region back in focus.