Ruida Futures: NI Has a Continuous Corrections, Concerns about Supply Reduced

Sunsirs: Sep 6

Ruida Futures: NI has a continuous correction and the concerns about the supply has been reduced.

Foreign and domestic trend: On Friday, the price of NID seesaws lower. At 15:10 (Beijing Time), the price of NID for 3 months is 17,415USD/t, the daily decline rate is 0.46%. NI1911 has a continuous correction, the highest price today is 142,600RMB/t, the lowest one is 138,080RMB/t, the closing price is 138,590RMB/t which is 3.00% less than that of yesterday. 159.86 lots are traded, which increases 371,000 lots; Open interest is 407,600 lots, increases 5,108 lots. The basis increases to 2,910RMB/t; The monthly price gap between NI1911 and NI1912 is 30RMB/t. 

Market focus: (1). In August, American ADP employment increased 195,000, it was recorded as the highest growth since April and it was the third consecutive monthly increase. The non-manufacturing PMI of ISM rose to 56.4, with a forecast of 54 and a pre-value of 53.7 (2) At 20:30, Friday (Beijing Time), the USA will release the August non-farm payrolls report. (3) Indonesia stipulates that smelting plants with export business must reach at least 90% of the actual schedule of smelter plants’ construction every six month. Otherwise, the export approval will be suspended and the administrative penalty will be imposed. Those who fail to pay fines may face the revocation of licenses.

Spot analysis: On Sep 6, the spot price of 1# electrolytic nickel is 141,200-141,800RMB/t, the average price is 141,500RMB/t, it drops 1,000RMB/t one day. According to SMM, Russian nickel goes into a backwardation and the basis narrows slightly, mainly due to the nickel price’s falling from high at the second half of this week. The downstream demand has been released, the import loss has been balanced but the window has not been opened yet, the domestic net consumption still continues. Jinchuan nickel is in a contango and has a slight increase compared to yesterday. Yesterday, the spot price equaled to the futures one, and then the nickel price falls sharply and goes up with a contango. In the morning, the nickel price was fluctuating around 1,413,000, some steel mills purchased in the market. The spot trading has been improved a little after nickel price’s falling from high.

Warehouse warrant and stock: On Friday, the warehouse receipt is 20, 556 tons in total, decreasing 53 tons daily; On Sep 5, the stock of NID was 153,822 tons, increasing 300 tons daily. Till this week (ends on Sep 6), the stock of nickel in Shanghai Futures Exchange is 21,523 tons, decreasing 3,739 tons this week.

SVZL: NI1911’s long position of the top 20 is 152,144 lots, increasing 6,715 lots one day. The short position is 139,480 lots, decreasing 3,521 lots one day. The net long position is 12,664 lots, increasing 3,194 lots one day.

Market study and determine: NI1911 has a continuous correction on Sep 6. China and US have determined the next consultation at the beginning of October, and China is making rigorous negotiations to eliminate further additional tariffs. The optimistic attitudes towards the market have been revived, all of these are good news to the nickel prices. Concerns about nickel supply have been reduced, the nickel price is at the adjustment stage, and the downstream demand of stainless steel is weak and the inventory is high, the pressure on nickel price will increase gradually. When it comes to the spot, NI drops at high, the downstream demand has been released, the import loss has been balanced but the window has not been opened yet, the domestic net consumption still continues. Technically, NI1911’s MACD shortens, KDJ becomes a signal of selling, the expected trend would be a short-term callback. Operationally, it is suggested that NI1911 should go short and buy in small quantities around 140,000 RMB/t and the stop loss price could be 142,000RMB/t.

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