Nickel prices dropped over 12% at one stage last week

摘要

Although the Greek crisis appeared to be the catalyst behind last week’s sell-off,we feel it was the turmoil in the Chinese equity markets that was the main factorbehind the deleveraging selling in metals. Nickel was particularly hard hit as it tendsto be a less liquid market and because the metal had recently been bid-up on theback of potential tightness in the SHFE contract. As such, nickel prices sold off 12.6%compared with sell-offs around the 5% mark in the likes of copper, aluminiumand zinc. These low prices must be hurting China’s NPI producers enormously tothe extent that we expect Chinese nickel production will be significantly lower thismonth. Our forecast is for nickel production to fall 12% this year and the fall is likely tobe weighted to the second half, especially with prices now this low and as stockpilesof Indonesian nickel ore in China run down to low levels.