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April 2017 | Base Metals

Nickel: Looking for short-covering catalysts

With geopolitical risks flaring up to compound nickel-specific supply-side risks, prices only look likely to trade sideways at best until sentiment recovers. For the time being, our base case forecast for Q2 is unchanged at $10,800/tonne, which is above the current level, but within the ~$2,000 range that has contained trading since July. The elevated level of speculative short positions provides upside risks to prices, but a catalyst is needed to set off short-covering rallies.

No news is good news Out of Southeast Asia, significant news flow has dried up, so it remains difficult to hone a confident view on key supply-side issues there. We are still expecting Indonesian ore to start flowing this quarter and we still expect Philippine ore to be minimally impacted by the government’s crackdown for the time being. That means NPI producers in China will largely be continuing to operate at high run rates and those in Indonesia will be continuing their ramp-ups. A look at prices shows both those for Philippine ore and domestic Chinese NPI are unchanged since late-February and are down 6.9% and 5.2% respectively since the end...


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