Nickel Price Forecast, August 2015: Currency War on the Horizon in China?

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On August 12, for the second straight day, China devalued its currency, sending nickel and other base metals in a free-fall. Then, the central bank pushed the value of the currency lower a third time yesterday.

China’s economy is at a standstill and investors are concerned that it could fall further as commodity prices, including nickel, are now in reverse and traders view the devaluation of the yuan as a sign a currency war could follow, further putting the global economy in turmoil.

However, the central bank stated that financial markets should not be affected in the long-term as it doesn’t anticipate a consistent depreciation of the yuan.

Want to know how this will affect future nickel prices? Get your 30-day forecasts for copper and 9 other metal forms in our new Monthly Metal Buying Outlook report.

“Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan,” the central bank stated.

Not everyone is so optimistic, however, as Rajeev De Mello, head of Asian fixed income at Schroders in Singapore, told The Guardian: “While it is too early to say whether this is the beginning of a sustained devaluation of the yuan, other central banks may be forced to follow suit and that may trigger a fresh round of currency weakening around the emerging world.”

Nickel Prices Primed for a Turnaround?

Our own Stuart Burns wrote just the other day that rising nickel inventories in London Metal Exchange warehouses could signal a bearish turn for the future of refined nickel prices.

This is contrary to the established viewpoint that the Indonesian export ban will lead to a shortage of nickel ore for Chinese production and, in turn, lead to rising prices. Burns concluded that as it is, there does not appear to be a case for nickel prices to rise in the near future.

So What Should My Industrial Buying Strategy Be?

You can find a more in-depth nickel price forecast in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

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