April Nickel Price Forecast: Shanghai Trading Changing the Game

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stainless-nickel-L1The Shanghai Futures Exchange (ShFE) is experiencing increased trading of nickel, which is creating a pull on physical units and causing a domino effect on the global refined metal supply chain.

According to a recent column from Andy Home of Reuters, nickel volumes and interest have increased significantly since the metal’s contract launched on the ShFE last March. In fact, volumes have already surpassed those on the London Metal Exchange (LME) which has ruled the wholesale nickel trading market in recent years.

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“The take-away is that although Shanghai nickel may be prone to the same day-trading investment crowd flooding other local markets, its success is founded on bigger, more institutional players who are prepared to hold positions for longer,” Home wrote for Reuters.

It’s also important to note that nickel trading on the ShFE rose so quickly that it created issues in the form of a squeeze on shorts for the July contract last year. This led to the delivery of three brands of Russian nickel in order to satisfy short position holders wanting to settle their positions with physical metal. With this development, both flows and stocks of refined nickel around the world were altered.

Non-Ferrous Metal Update

Nickel, itself a non-ferrous metal, along with iron ore and steel are seeing their prices drop following a decision by the Chinese government to increase trading margins and fees futures exchanges in Dalian, Shanghai and Zhengzhou. In response, the most-traded contracts were down up to 4.6%, according to our own Stuart Burns.

You can find a more in-depth nickel price forecast and outlook in our brand new Monthly Metal Buying Outlook report. Check it out to receive short- and long-term buying strategies with specific price thresholds.


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