Summary: The recent passage of a $1 trillion infrastructure bill by the U.S. Senate is expected to boost demand for metals. Overall supply and demand remain tight, providing strong support for nickel prices. However, there is still pressure to break through the previous high of 150,000 yuan/ton, and nickel prices are expected to remain in a high-level range in the short term.
Last week, nickel prices first fell and then surged. As of August 13, nickel prices had risen sharply by 4.49%, with spot quotes at 148,133.33 yuan/ton, up 4.49% from 141,766.67 yuan/ton at the beginning of the week, up 15.61% from the start of the year, and up 29.75% year-on-year. Nickel prices had been declining weakly since August, but rebounded from lows in the last two days, basically recovering all losses since August.
At the beginning of the week, better-than-expected U.S. July non-farm payroll data triggered expectations of Fed tapering, causing a broad decline in metal prices and a slight pullback in nickel prices. Later, the U.S. Senate passed the $1 trillion infrastructure bill, which is expected to boost metals demand, driving a rebound in metals.
Supply side: Earlier, Indonesia's resurgence of COVID-19 restricted nickel pig iron supply, coupled with insufficient shipping capacity, pushed high-grade nickel pig iron prices directly above the 2017 high, forcing a sustained broad rise in global nickel ore prices and providing strong cost support. Currently, the overseas pandemic remains severe, with the Philippines and Indonesia affected by export and transportation disruptions, reducing inflows of raw materials, and overall supply remains tight.
Downstream: In June, sales of new energy vehicles reached 256,000 units, up 1.4 times year-on-year; from January to June, production and sales of new energy vehicles both doubled year-on-year, indicating a relatively high level of demand in the new energy sector. Domestically, stainless steel production and sales continue to climb, driving demand for nickel. Low nickel inventories also provide support for nickel prices.
In summary: The recent passage of the $1 trillion infrastructure bill by the U.S. Senate is expected to boost metals demand. Overall supply and demand remain tight, providing strong support for nickel prices. However, there is still pressure to break through the previous high of 150,000 yuan/ton, and nickel prices are expected to remain in a high-level range in the short term.