Most base metals fell this month, pressured by a rising U.S. dollar. Meanwhile, Nickel prices traded almost flat. Why does this matter? This means that despite downward pressure in the metal complex this month, investors are not giving much ground on nickel.
This price action seems very constructive and chances are that nickel is setting up for a new rally after this consolidation. On top of that, nickel’s fundamentals also favor a move higher:[caption id="attachment_81570" align="aligncenter" width="400"] Nickel prices are holding well, setting up for an upside move. Source: MetalMiner analysis of Fastmarkets.com data.[/caption]
First, Indonesia recently announced that the country will “almost definitely” keep in place a ban on nickel ore and bauxite exports. Just a few days ago, nickel investors were concerned that Indonesia was considering lifting the ban. Now that those fears have waned, investors might be more inclined to chase prices higher.
Second, The Philippines announced that it will prolong the ban on new mines, reviewing all environmental permits previously granted to nickel producers. The announcement dashes industry hopes that some restrictions may be lifted following the audit that finished in August. The news come after a quarter of the country’s miners have been closed with another 20 of them under the risk of suspension.
What This Means For Nickel Buyers
Nickel prices might be setting up for a move higher. At least both the price action and fundamentals seem to agree with that. Buyers should have a good plan in order to protect margins in case of a price increase.